Life Insurance For Non-Resident Indians (NRIs): A Primer


Are you an NRI looking to secure your family’s financial future? Investing in a life insurance policy can provide the protection and peace of mind you need, even if you’re residing abroad. In this comprehensive guide, we will explore the ins and outs of life insurance for NRIs, answering common questions and shedding light on the various types of life insurance policies available.

Understanding Life Insurance Policy Plans for NRIs

Life insurance policy plans are financial tools that offer protection and financial security to you and your loved ones in case of unfortunate events. As an NRI, you have the option to purchase these policies in India, thanks to the Foreign Exchange Management Act. Whether you’re looking for affordable savings plans or regular income plans, life insurance can help you meet your financial goals.

Types of Life Insurance Policies Available for NRIs

When it comes to life insurance policy plans, NRIs have several options to choose from. Let’s take a closer look at some of the most popular types:

1. Term Insurance: This is the simplest and most affordable type of life insurance. It provides coverage for a specified term, offering a sum assured to your beneficiaries in case of your demise during the policy period.

2. Unit Linked Insurance Plans (ULIPs): ULIPs combine life insurance with investments. A portion of your premium goes towards providing life cover, while the remaining amount is invested in various funds based on your risk appetite and financial goals.

3. Endowment Policies: These policies offer both protection and savings components. If you survive the policy term, you receive the maturity benefits along with bonuses accrued over time.

4. Whole Life Insurance: Whole life insurance provides coverage for your entire lifetime, as long as premiums are paid regularly. These policies also come with a cash value component that grows over time, allowing you to borrow against it if needed.

The Benefits of Life Insurance for NRIs

Purchasing a life insurance policy in India as an NRI offers several advantages:

1. Financial Security: Life insurance policies ensure a good source of income and act as a safety net for your family members. In the event of the sudden demise of the primary income earner, a life insurance policy can provide financial support to cover loss or any other uncertainties.

2. Tax Benefits: In India, life insurance policies offer tax benefits under Section 80C of the Income Tax Act, 1961. The premiums paid are eligible for deductions from your taxable income, reducing your overall tax liability.

3. Diversification of Investments: Investing in a life insurance policy allows NRIs to diversify their investment portfolio and take advantage of the growth potential of the Indian economy.

4. Hassle-free Payment Methods: NRIs can conveniently pay their premiums through settlement payments in foreign currency, non-resident ordinary bank accounts, or FCNR/NRE bank accounts.

5. Flexibility: Life insurance policies offer flexibility in terms of premium payment frequency, policy term, and coverage amount. You can choose a plan that aligns with your financial goals and changing circumstances.

Sample Calculation:

Let’s consider an example to understand how different types of life insurance policies work:

Mr. Sharma, an NRI, is 35 years old and wants to purchase a life insurance policy with a sum assured of ₹1 crore. Here’s how the premiums and benefits may differ for each type of plan:

1. Term Insurance: Mr. Sharma opts for a term insurance policy with a tenure of 30 years. The annual premium for a healthy non-smoker like him could be approximately ₹10,000-15,000*. If he passes away during the policy term, his nominee will receive the sum assured of ₹1 crore as the death benefit.

2. Whole Life Insurance: With whole life insurance, Mr. Sharma can expect higher premiums compared to term insurance due to the lifelong coverage and cash value accumulation component. The annual premium could range from ₹25,000-50,000*. In addition to providing financial protection throughout his life, this policy also offers potential returns on investment.

3. ULIPs: ULIPs offer flexibility by allowing Mr. Sharma to choose between different investment funds based on his risk appetite and financial goals. The annual premium for ULIPs could vary depending on factors such as age, sum assured, and investment allocation preferences. Assuming an average premium rate of ₹30,000-40,000*, Mr. Sharma can benefit from potential market-linked returns along with life coverage.

4. Endowment Plans: An endowment plan would require Mr. Sharma to pay higher premiums compared to term insurance but lower compared to whole life insurance. The annual premium for an endowment plan could fall in the range of ₹20,000-30,000*. In case of his demise during the policy term, his nominee would receive the sum assured along with any accrued bonuses.


Life insurance policy plans are an essential component of financial planning for NRIs. They offer financial security to your loved ones in case of any unforeseen events and provide tax benefits. As an NRI, it is crucial to explore the different types of life insurance policies available and choose one that aligns with your financial goals and circumstances.

By understanding the importance of life insurance policy plans and their various benefits, you can ensure a financially secure future for yourself and your family.

Remember, always consult with a trusted financial advisor or insurance expert before making any decisions regarding life insurance policy plans for NRIs.

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