Non-resident Indians (NRIs) are preferring to buy term insurance policies from India as they are 20-50% cheaper as compared with those bought from the US, UAE or Singapore. This gap can translate into substantial long-term savings, especially for higher cover amounts.
Moreover, Indian insurers offer large sum assured options and long tenures, making it easier to align protection with long-term family goals. A rupee-denominated payout also shields families in India from currency volatility and conversion losses.
Most life insurance policies include global coverage that ensures that an NRI will continue to have coverage, no matter where they live, including when they return to India.
Varun Agarwal, head of Term Insurance at Policybazaar, says for high coverage amounts, this means savings of several lakhs of rupees over the policy term. “The pricing advantage becomes even more compelling for younger NRIs locking in long-term protection early,” he says.
In fact, a survey by Policybazaar shows over 60% of NRIs who have bought a term plan in India are below the age of 40. The shift toward higher protection is evident as Rs 3-crore-cover bookings grew by 45% in the current financial year till December.
The preference reflects a clear awareness of the advantages of early health underwriting and the need to lock in low premiums when young.
A term plan also ensures that their family’s financial security will be ensured once they return to their homeland.Apart from pure term insurance, NRIs are opting for savings-oriented products such as endowment or guaranteed return plans when they want disciplined long-term savings in India. Unit-linked insurance plans have also found traction among NRIs for market-linked growth and an insurance cover. However, annuity or pension plans are not popular among NRIs because of better social security in the country of their residence.
Lower premium
The costs for term insurance differ dramatically, with many countries in the developed world charging far more for life insurance than those in India, primarily because of differences in underwriting requirements, health care costs and mortality tables. In comparison, Indian insurers often offer better premium value.
For NRIs earning in stronger currencies such as the US dollar, Great British pound or Australian dollar, paying premiums in Indian rupees is more economical than purchasing a policy abroad.
“Premium rates for term plans in the UK are almost 35% more than India. In the US, premium rates of term plans are 25-50% higher. In Gulf countries, premium rates are almost 20% higher,” says Shilpa Arora, co-founder and COO, Insurance Samadhan.
Digital onboarding
Digital onboarding has eased the process for NRIs to buy term plans from India. They no longer need to travel to India to sign documents and undergo medical tests. Sarita Joshi, head of Health and Life Insurance, Probus, says NRIs can fill the proposal form and do KYC online. Documents are uploaded electronically and policies are issued through e-signatures. “Premiums are paid from abroad through NRE, NRO, or FCNR accounts. Tele-medicals, and digital underwriting have replaced the logjam with assurance,” she says.
But maturity or death proceeds are paid only in Indian rupees through an NRO account. Customers should also check on the Double Taxation Avoidance Agreement that India enjoys with the country of their residence, so that they are not taxed twice on the proceeds.
