NRI Insurance Guide -- Life, Health & Tax Benefits in India (2026)

A Chartered Accountant's Definitive Guide to Buying, Managing, and Claiming Insurance in India as a Non-Resident Indian

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Author: CA Mayank Wadhera (CA | CS | CMA | IBBI Registered Valuer) Founder, MKW Advisors | Legal Suvidha | DigiComply

Published: March 2026 Last Updated: March 23, 2026 Reading Time: 18 minutes

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Table of Contents

1. Can NRIs Buy Insurance in India?
2. Types of Insurance Available to NRIs
3. Term Insurance for NRIs: Why India Is Cheaper
4. Health Insurance: Mediclaim for NRI Parents and Coverage During Visits
5. Section 80C Deduction on Life Insurance Premium
6. Section 80D Deduction on Health Insurance
7. Tax on Insurance Maturity: Section 10(10D) Exemption Rules
8. ULIP Taxation Changes Post-2021: The 2.5 Lakh Threshold
9. Surrender Value Taxation
10. NRI-Specific Challenges: Disclosure, Claims, and Compliance
11. Insurance as Investment vs Pure Protection -- A CA Perspective
12. Comparison: India Insurance vs Country-of-Residence Insurance
13. Common Mistakes NRIs Make with Insurance in India
14. FAQs: NRI Insurance in India

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Can NRIs Buy Insurance in India?

Yes, Non-Resident Indians (NRIs) can absolutely buy insurance in India. The Insurance Regulatory and Development Authority of India (IRDAI) permits NRIs to purchase life insurance, health insurance, ULIPs, endowment plans, and other insurance products from Indian insurers. There is no blanket restriction preventing NRIs from holding Indian insurance policies.

However, the process is not identical to what a resident Indian experiences. Insurers impose additional requirements, documentation, and -- in some cases -- limitations based on the NRI's country of residence.

Key Points NRIs Must Know Before Buying Insurance in India

• IRDAI permits NRI insurance purchases, but individual insurers may have their own eligibility criteria based on your country of residence.
• Country restrictions apply. Insurers typically do not issue policies to NRIs residing in sanctioned or high-risk jurisdictions (e.g., certain FATF-listed countries). NRIs in the US, UK, UAE, Singapore, Canada, Australia, and most European nations face no such restrictions.
• KYC and documentation requirements are more stringent. You will need to provide your passport, valid visa or residence permit, overseas address proof, and NRE/NRO bank account details.
• Premium payment must be routed through NRE or NRO accounts in India. Payment from foreign bank accounts directly is generally not accepted.
• Medical underwriting may require tests at IRDAI-empanelled centres in India or, for some insurers, at approved centres abroad.

CA's Tip: If you already hold a life insurance policy that was purchased when you were a resident Indian, it remains valid after you become an NRI. However, you are legally obligated to inform the insurer about your change of residential status. Failing to do so can jeopardize claim settlement.

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Types of Insurance Available to NRIs

NRIs in India can purchase the following categories of insurance:

1. Term Life Insurance

Pure protection plans with no maturity benefit. You pay a premium; if the insured event (death) occurs during the policy term, the nominee receives the sum assured. This is the most cost-effective form of life cover.

2. Endowment Plans

Traditional life insurance policies that combine protection with savings. They offer a guaranteed maturity benefit along with bonuses. Returns are modest (typically 4-6% post-tax) but carry low risk.

3. Unit-Linked Insurance Plans (ULIPs)

Market-linked insurance products where a portion of the premium is invested in equity, debt, or hybrid funds. ULIPs offer flexibility but carry market risk. Post-2021 tax changes have altered their attractiveness significantly.

4. Health Insurance (Mediclaim)

Indemnity-based or benefit-based health plans that cover hospitalization expenses in India. NRIs commonly purchase these for their parents residing in India or for their own coverage during visits.

5. Whole Life Insurance

Policies that provide coverage for the entire lifetime of the insured (typically up to age 99-100), combining a death benefit with a cash value component.

6. Money-Back Plans

Policies that pay out a percentage of the sum assured at regular intervals during the policy term, with the balance paid at maturity.

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Term Insurance for NRIs: Why India Is Cheaper

This is one of the most compelling reasons for NRIs to maintain insurance ties with India. Term insurance premiums in India are significantly lower than comparable coverage in the US, UK, UAE, or most other countries where NRIs reside.

Why the Cost Difference Exists

NRI-Specific Considerations for Term Insurance

• Country loading: Some insurers apply a premium loading (10-25% additional) for NRIs in certain countries, particularly those with higher healthcare costs or perceived risk.
• Sum assured caps: The maximum sum assured available to NRIs may be lower than what is offered to resident Indians. Typically, NRIs can get coverage of Rs 2-5 crore, though some insurers offer up to Rs 10 crore.
• Income documentation: Insurers require proof of income (salary slips, tax returns from the country of residence, or bank statements) to justify the sum assured.

Claim Process from Abroad

This is the question that causes the most anxiety among NRIs considering Indian term insurance. Here is how it works:

1. Intimation of claim: The nominee or legal heir must intimate the insurer about the death of the policyholder. Most insurers now accept claim intimation via email, online portals, or toll-free numbers accessible internationally.

2. Documentation submission: Required documents typically include:

   • Death certificate (if death occurs abroad, it must be attested by the Indian embassy/consulate and apostilled)
   • Policy document (original or certified copy)
   • Claimant's identity and address proof
   • FIR or post-mortem report (if applicable)
   • Bank account details of the nominee (NRE/NRO account in India)

3. Investigation (if applicable): For claims within the first three years of policy issuance, insurers may conduct an investigation. For NRI claims, this process can take longer -- typically 60-90 days versus 30 days for domestic claims.

4. Settlement: Once approved, the claim amount is credited to the nominee's bank account. If the nominee is also an NRI, the funds can be received in an NRE account and repatriated abroad (subject to FEMA regulations and tax clearance).

Practical Insight: I strongly recommend NRIs appoint a trusted family member or professional advisor in India as a point of contact for claim processing. This dramatically reduces friction in an already difficult time. Our team at MKW Advisors regularly assists NRI families with insurance claim settlements.

Need help with NRI insurance planning or claim settlement? Book a consultation with our team or reach us on WhatsApp at +91-96677 44073.

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Health Insurance: Mediclaim for NRI Parents and Coverage During Visits

Health insurance is arguably the most practically valuable insurance product for NRIs with family in India. The two primary use cases are:

1. Health Insurance for NRI Parents in India

This is the most common scenario. NRI children want to ensure their elderly parents in India have adequate health coverage.

What to look for:

• No medical test plans for parents below age 60-65 (limited options above 65)
• Pre-existing disease coverage after a waiting period (typically 2-4 years)
• Network hospital coverage in the city where parents reside
• Cashless claim facility at network hospitals
• Room rent limits -- prefer plans without room rent capping
• Restoration benefit -- the sum insured gets restored if exhausted during the policy year
• Coverage amount: For parents in metros, a minimum of Rs 10-15 lakh is advisable; Rs 25-50 lakh with a super top-up is ideal

Typical premiums for senior citizen health insurance:

2. Health Insurance for NRI Self-Coverage During India Visits

NRIs visiting India for short or extended periods can maintain a domestic health insurance policy. Key considerations:

• Waiting period for pre-existing diseases starts from policy inception, so buy early
• Coverage is valid only for treatment in India
• Some policies have a minimum India stay requirement per year (e.g., 30 days)
• Claims for treatment abroad are not covered under Indian health policies
• Useful for NRIs who visit India frequently or plan to return permanently

Important Caveat

Indian health insurance policies do not cover medical treatment abroad. If you need global health coverage, you must purchase international health insurance from your country of residence or a global insurer. Indian Mediclaim is exclusively for treatment within India.

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Section 80C Deduction on Life Insurance Premium

Applicability to NRIs

NRIs can claim deduction under Section 80C for life insurance premiums paid, but only if they opt for the old tax regime. The new tax regime (default from FY 2023-24 onwards under Section 115BAC) does not allow Section 80C deductions.

Conditions for Section 80C Deduction

Practical Implications for NRIs

For NRIs with taxable income in India (rental income, capital gains, etc.) who choose the old tax regime, the Section 80C deduction on insurance premiums can reduce their tax liability. However, most NRIs with only investment income in India may find the new regime more beneficial, in which case this deduction becomes irrelevant.

The decision between old and new regime should be made holistically, considering all deductions and exemptions available -- not just insurance. This is exactly the kind of optimization our team handles for NRI clients.

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Section 80D Deduction on Health Insurance

Section 80D is a powerful deduction for NRIs, and unlike many provisions, it is available under both the old and new tax regimes (with limitations under the new regime from FY 2024-25 onwards for specific categories).

Deduction Limits (FY 2025-26)

Key Rules for NRIs

• Premium must be paid by any mode other than cash (cheque, bank transfer, online payment from NRE/NRO account)
• The health insurance policy must be taken from an IRDAI-registered insurer
• Preventive health check-up: An additional deduction of up to Rs 5,000 is available within the overall limits mentioned above
• Medical expenditure for senior citizens without insurance: If your parents are senior citizens (60+) and do not have health insurance, you can claim deduction for actual medical expenditure up to Rs 50,000 under Section 80D

NRI-Specific Nuance

The deduction is available only if the NRI has taxable income in India and files an Indian income tax return. Premium paid for a health insurance policy purchased from a foreign insurer does not qualify for Section 80D deduction. The policy must be from an Indian insurer.

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Tax on Insurance Maturity: Section 10(10D) Exemption Rules

This is where most NRIs -- and frankly, many tax professionals -- get confused. The taxation of insurance maturity proceeds has become increasingly complex.

The Basic Rule: Section 10(10D)

Any sum received under a life insurance policy, including bonus, is exempt from income tax under Section 10(10D), provided:

1. For policies issued after April 1, 2012: The annual premium does not exceed 10% of the sum assured in any year during the policy term.
2. For policies issued before April 1, 2012: The annual premium does not exceed 20% of the sum assured.
3. For policies issued after April 1, 2013 (for persons with disability/disease under Sections 80U/80DDA/80DDB): The premium threshold is 15% of the sum assured.

When Maturity Proceeds Become Taxable

If the premium exceeds the thresholds above, the entire maturity proceeds become taxable as "Income from Other Sources" in the year of receipt.

Example: You hold an endowment policy with a sum assured of Rs 10 lakh, issued in 2015. If your annual premium exceeds Rs 1 lakh (10% of Rs 10 lakh), the maturity proceeds will be fully taxable. The taxable amount is calculated as: Maturity Proceeds minus Total Premiums Paid. This net gain is taxed at your applicable slab rate.

Death Benefit: Always Tax-Free

Regardless of premium-to-sum-assured ratio, the death benefit received by nominees is always fully exempt under Section 10(10D). This is an important distinction.

TDS on Insurance Maturity

If the maturity proceeds are taxable (i.e., they do not qualify for Section 10(10D) exemption) and exceed Rs 1 lakh, the insurer will deduct TDS:

• For residents: 5% TDS under Section 194DA
• For NRIs: TDS at applicable rates under Section 195, which could be at slab rates or 30% (plus surcharge and cess), depending on the nature of income

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ULIP Taxation Changes Post-2021

The Finance Act 2021 introduced a significant change that fundamentally altered the tax treatment of ULIPs. This is one of the most misunderstood areas in NRI taxation.

The New Rule (Applicable from FY 2021-22 Onwards)

For ULIP policies issued on or after February 1, 2021:

• If the aggregate annual premium exceeds Rs 2.5 lakh across all ULIP policies held by the individual, the maturity proceeds lose the Section 10(10D) exemption.
• Such ULIPs are treated as capital assets, and the maturity/surrender proceeds are taxed as capital gains.
• The gains are computed similar to equity mutual fund taxation: long-term capital gains (if held for more than 12 months) are taxed at 12.5% (revised rate from FY 2024-25) on gains exceeding Rs 1.25 lakh in a financial year; short-term capital gains are taxed at 20%.

What This Means for NRIs

NRI Impact Assessment

Many NRIs were sold high-premium ULIPs (Rs 5 lakh, Rs 10 lakh, or even Rs 25 lakh annual premiums) as "tax-free investment" products. Post-2021, this tax advantage has been curtailed for high-premium policies. If you hold such a ULIP, you need to:

1. Re-evaluate the product -- the tax arbitrage may no longer exist
2. Compare post-tax returns with direct mutual fund investments
3. Consider surrendering (after completing the 5-year lock-in) if the product is underperforming

CA's Note: In my practice, I have seen numerous NRIs holding ULIPs with Rs 5-10 lakh annual premiums, purchased on the advice of relationship managers promising "tax-free returns." Post-2021, these products are no longer tax-efficient. A thorough review is essential.

Want a professional review of your ULIP portfolio? Schedule a consultation or email us at [email protected].

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Surrender Value Taxation

When you surrender (cancel) a life insurance policy before maturity, the tax treatment depends on when the policy was issued and the premium-to-sum-assured ratio.

Surrender Within the First 2 Years

• You receive the guaranteed surrender value (which is often zero or negligible for traditional policies)
• Any Section 80C deduction previously claimed on premiums is reversed -- the deduction amount is added back to your income in the year of surrender
• For ULIPs, no surrender is permitted within the 5-year lock-in period

Surrender After 2 Years but Before Maturity

• The surrender value received is evaluated against Section 10(10D) criteria
• If the policy qualifies for Section 10(10D) exemption (premium below the threshold), the surrender value is tax-free
• If it does not qualify, the surrender value minus total premiums paid is taxable as "Income from Other Sources"

Post-2023 Changes for Non-Exempt Policies

From FY 2023-24, for policies with annual premiums exceeding Rs 5 lakh (aggregate across all policies, excluding ULIPs), the maturity or surrender proceeds do not qualify for Section 10(10D) exemption. The computation works as follows:

• Taxable amount = Surrender/Maturity value minus (Sum of premiums paid that did not get 80C deduction + Premiums that got 80C deduction but were already reversed)
• This is effectively taxing the net gain from the policy

NRI Considerations for Surrender

• TDS will be deducted by the insurer on the taxable portion
• For NRIs, TDS rates under Section 195 apply (typically 30% plus surcharge and cess)
• You can claim a refund of excess TDS by filing an Indian income tax return
• If you plan to surrender, do it before March 31 of the financial year to manage your tax planning effectively

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NRI-Specific Challenges

1. Mandatory Disclosure of NRI Status

This is non-negotiable. When you purchase a new policy or when your residential status changes from resident to NRI, you must disclose this to the insurer. The consequences of non-disclosure are severe:

• Claim rejection: Insurers can reject claims on the grounds of material non-disclosure
• Policy voidance: The policy can be declared void ab initio (from the beginning)
• IRDAI regulations require insurers to know the risk profile of the insured, and residential status is a material fact

2. Premium Payment Complications

• Premiums must be paid from an NRE or NRO account in India
• Auto-debit mandates set up on a resident savings account may fail after the account is converted to NRO
• Credit card payments from foreign credit cards are generally not accepted
• Some insurers require the policyholder to set up a new payment mandate from the NRO/NRE account

3. Claim Settlement from Abroad

• The process is lengthier for NRIs -- expect 60-120 days for non-straightforward claims
• Documentation attestation from Indian embassy/consulate adds time and cost
• Apostille requirements for death certificates issued abroad
• Currency conversion and repatriation add complexity
• Having a local representative in India is almost essential

4. Medical Tests for New Policies

• Some insurers require medical tests to be conducted in India, which means the NRI must time the purchase with an India visit
• A few progressive insurers accept medical test reports from IRDAI-empanelled international centres or approved labs abroad
• Tele-medical examinations have become more common post-COVID, which helps

5. Country-Specific Restrictions

NRIs in the following regions may face additional scrutiny or restrictions:

• US residents: Some Indian insurers avoid US-resident NRIs due to compliance complexity under US tax laws (FATCA reporting)
• Middle East (certain countries): May require additional documentation
• Countries on FATF grey/black list: Most insurers will decline to issue policies

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Insurance as Investment vs Pure Protection -- A CA Perspective

As a practicing Chartered Accountant who has advised hundreds of NRI families, I want to state my professional position clearly: for the vast majority of NRIs, insurance should serve one purpose -- risk protection. It should not be treated as an investment vehicle.

Why Pure Term Insurance Wins for NRIs

The Math That Settles the Debate

Consider a 35-year-old NRI earning Rs 50 lakh per year:

Option A: Endowment Plan

• Sum Assured: Rs 1 Crore
• Annual Premium: Rs 5,00,000
• Policy Term: 25 years
• Total Premium Paid: Rs 1,25,00,000
• Approximate Maturity Value: Rs 1,80,00,000 -- Rs 2,00,00,000
• Effective Return: 4-5% pre-tax

Option B: Term Insurance + Mutual Fund SIP

• Term Insurance (Rs 1 Cr cover): Rs 12,000/year
• Remaining amount invested in diversified mutual fund SIP: Rs 4,88,000/year
• Total outflow: Rs 5,00,000/year (same as Option A)
• Mutual fund corpus after 25 years (at 12% CAGR): Rs 75,00,000 -- Rs 85,00,000 approximately
• Even at a conservative 10% CAGR: Rs 55,00,000 -- Rs 65,00,000

The difference is stark. Option B generates 3-4x the wealth while providing the same life cover.

When Investment-Linked Insurance Might Make Sense

In fairness, there are limited scenarios where endowment or ULIP plans can be appropriate:

• Conservative investors who will never invest in mutual funds and need forced savings
• Estate planning where the guaranteed nature of endowment proceeds simplifies succession
• Tax planning under the old regime where 80C deductions are needed and other 80C avenues are exhausted
• ULIPs with low charges from certain direct plans (rare but available)

But these are exceptions, not the rule.

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Comparison: India Insurance vs Country-of-Residence Insurance

This is a critical decision matrix for every NRI. Should you buy insurance in India, in your country of residence, or both?

Life Insurance Comparison

Health Insurance Comparison

My Recommendation

The optimal structure for most NRIs is:

1. Term life insurance in India -- for the cost advantage and to protect India-based dependents/liabilities
2. Health insurance in the country of residence -- for day-to-day healthcare needs
3. Health insurance in India -- specifically for parents and for personal coverage during India visits
4. Additional term cover in country of residence -- if you have local liabilities (mortgage, etc.) that need local currency coverage

Do not rely solely on Indian health insurance if you live abroad. It will not cover treatment outside India.

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Common Mistakes NRIs Make with Insurance in India

Drawing from over a decade of advising NRI clients, here are the most frequent -- and most costly -- errors I encounter:

Mistake 1: Not Disclosing NRI Status to the Insurer

The Problem: Many NRIs continue their pre-existing policies without informing the insurer about their status change. Some deliberately conceal NRI status when buying new policies to avoid premium loading.

The Consequence: This constitutes material non-disclosure. At the time of claim, when the insurer investigates (as they invariably do for large claims), the non-disclosure surfaces. The claim can be -- and often is -- rejected.

The Fix: Immediately notify all your Indian insurers about your NRI status. Accept the nominal premium increase. It is a small price for claim certainty.

Mistake 2: Paying Premium from the Wrong Account

The Problem: Premiums paid from a foreign bank account or from a regular resident savings account (that should have been converted to NRO) can create FEMA compliance issues.

The Consequence: While it may not directly affect the policy, it creates an FEMA contravention. Additionally, if the payment trail is irregular, it can complicate claim settlement.

The Fix: Route all premium payments through your NRE or NRO account. Set up auto-debit from these accounts.

Mistake 3: Over-Insuring Through Investment Products

The Problem: NRIs are frequently sold high-premium ULIPs and endowment plans by banks and agents as "investment opportunities" or "tax-saving instruments."

The Consequence: Poor returns, high charges, liquidity lock-in, and since 2021, reduced tax benefits on ULIPs above Rs 2.5 lakh annual premium.

The Fix: Buy adequate term insurance for protection. Invest separately through mutual funds, stocks, or other instruments.

Mistake 4: Ignoring the Nominee Update

The Problem: Policies purchased years ago may have outdated nominee details -- a parent who has since passed, a former spouse, or simply an old address.

The Consequence: Claim settlement becomes a legal quagmire.

The Fix: Review and update nominee details on all policies annually.

Mistake 5: Not Maintaining Premium Payment Records

The Problem: NRIs lose track of premium payment receipts over years, making it difficult to compute the taxable amount on maturity or surrender.

The Consequence: Higher tax outgo because the net gain cannot be accurately computed.

The Fix: Maintain a digital folder with all premium payment receipts, policy documents, and correspondence.

Mistake 6: Assuming Indian Health Insurance Covers Treatment Abroad

The Problem: Some NRIs buy Indian health insurance expecting it to cover medical emergencies in their country of residence.

The Consequence: Claims for treatment outside India are rejected.

The Fix: Indian health insurance covers treatment in India only. Buy separate international coverage for your country of residence.

Mistake 7: Letting Policies Lapse Due to Payment Issues

The Problem: After moving abroad, auto-debit mandates from the old resident account stop working, and the NRI forgets to set up fresh mandates from NRE/NRO accounts.

The Consequence: Policy lapses. Reviving a lapsed policy requires payment of all missed premiums with interest and fresh medical underwriting.

The Fix: Immediately set up premium payment mandates from your NRE/NRO account upon becoming an NRI.

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Avoid these costly mistakes. Let our expert NRI tax team review your insurance portfolio. Get in touch | WhatsApp: +91-96677 44073 | Email: [email protected]

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FAQs: NRI Insurance in India

Q1: Can an NRI buy term insurance online in India?

A: Yes, several Indian insurers offer online term insurance purchase for NRIs. However, the process typically requires additional KYC documentation (passport, visa copy, overseas address proof) and medical tests. Some insurers have a fully digital process for NRIs in select countries (US, UK, UAE, Canada, Singapore, Australia), while others may require you to visit India for medical tests. Popular insurers offering NRI term plans include HDFC Life, ICICI Prudential, Max Life, and Tata AIA.

Q2: Is the insurance claim amount received by an NRI nominee taxable in India?

A: Death benefit proceeds received by a nominee under a life insurance policy are fully exempt from income tax under Section 10(10D), regardless of the premium amount. This applies equally to resident and NRI nominees. However, if the maturity proceeds (not death benefit) are received and the policy does not meet the Section 10(10D) criteria (premium exceeds 10% of sum assured), the maturity amount is taxable.

Q3: Can NRIs claim Section 80D deduction for health insurance of parents in India?

A: Yes, NRIs can claim Section 80D deduction for health insurance premiums paid for their parents residing in India, provided the NRI has taxable income in India and files a tax return. The deduction limit is Rs 25,000 for parents below 60 years and Rs 50,000 for parents who are senior citizens (60 and above). The premium must be paid from the NRI's bank account (NRE/NRO) and the policy must be from an IRDAI-registered insurer.

Q4: What happens to my existing life insurance policy when I become an NRI?

A: Your existing life insurance policy remains valid when your residential status changes from resident to NRI. You are required to inform the insurer about the change in status. The insurer may adjust the premium (usually a nominal increase) and update your records. Failure to inform the insurer is a material non-disclosure that can affect claim settlement. You should also update your premium payment method to route payments through your NRE or NRO account.

Q5: Can an NRI buy health insurance for parents in India without visiting India?

A: Yes, many insurers allow NRIs to purchase health insurance for their parents in India without being physically present. The application can be completed online or through an advisor. However, if the parents are above a certain age (typically 45-55 years, depending on the insurer), medical tests may be required, which the parents would need to complete at an empanelled diagnostic centre in India.

Q6: Is the premium paid by an NRI for a ULIP eligible for Section 80C deduction?

A: Yes, ULIP premiums are eligible for Section 80C deduction up to Rs 1,50,000 per year, subject to the condition that the annual premium does not exceed 10% of the sum assured. However, this deduction is available only under the old tax regime. Under the new tax regime (Section 115BAC), which is the default from FY 2023-24, Section 80C deductions are not available.

Q7: How are ULIP maturity proceeds taxed for NRIs after the 2021 changes?

A: For ULIP policies issued on or after February 1, 2021, if the aggregate annual premium across all ULIPs exceeds Rs 2.5 lakh, the maturity proceeds are not exempt under Section 10(10D). Instead, they are taxed as capital gains -- long-term capital gains at 12.5% (for holding period exceeding 12 months, on gains above Rs 1.25 lakh) or short-term capital gains at 20%. For NRIs, TDS will be deducted by the insurer/fund house before payout.

Q8: Can an NRI pay insurance premium from a foreign bank account?

A: Generally, no. Indian insurers require premiums to be paid from an Indian bank account -- specifically an NRE or NRO account. Direct payment from a foreign bank account in foreign currency is typically not accepted. Some insurers may accept international wire transfers credited to their collection accounts, but this is not standard practice. The recommended approach is to maintain an NRE or NRO account with adequate balance and set up auto-debit for premium payments.

Q9: What documents does an NRI need to buy insurance in India?

A: The typical documentation requirements for an NRI purchasing insurance in India include:

• Valid Indian passport (or OCI card for persons of Indian origin)
• Valid visa or residence permit of the country of residence
• Overseas address proof (utility bill, bank statement, or residence permit)
• Indian address proof (Aadhaar card, if available, or other valid document)
• PAN card
• NRE/NRO bank account details and a cancelled cheque
• Income proof (salary slips, employment letter, or tax return from country of residence)
• Passport-size photographs
• Completed proposal form with NRI-specific sections filled in
• Medical test reports (if required based on age and sum assured)

Q10: Is there any restriction on the sum assured for NRI life insurance?

A: Yes, most insurers impose a cap on the maximum sum assured available to NRIs, which is generally lower than the cap for resident Indians. Typically, NRIs can get coverage ranging from Rs 50 lakh to Rs 10 crore, depending on the insurer, the NRI's income, and their country of residence. The sum assured is usually linked to income -- insurers typically offer 10-15 times the annual income as the maximum cover. NRIs in certain high-risk countries may face lower caps.

Q11: Can an NRI surrender a ULIP before the 5-year lock-in period?

A: No, IRDAI regulations mandate a 5-year lock-in period for all ULIPs. During this period, the policyholder cannot surrender or withdraw funds (except in case of death of the life assured). After the lock-in period, the NRI can surrender the ULIP and receive the fund value. The tax treatment of the surrender proceeds will depend on whether the policy was issued before or after February 1, 2021, and whether the annual premium exceeds the Rs 2.5 lakh threshold.

Q12: How does an NRI choose between old and new tax regime for insurance deductions?

A: The choice depends on the NRI's overall deduction profile, not just insurance:

• Old regime benefits if you have substantial deductions under 80C (insurance, PPF, ELSS), 80D (health insurance), HRA, home loan interest, etc. Insurance deductions make a meaningful difference here.
• New regime benefits if your total deductions are less than approximately Rs 3-3.5 lakh (the break-even varies by income level), as the lower slab rates under the new regime outweigh the lost deductions.
• For NRIs whose only India income is rental income or capital gains, the new regime is often more favorable, and insurance deductions become less relevant in the decision.

A detailed tax computation under both regimes is essential before making this choice. This is one of the most impactful advisory services we provide to our NRI clients.

Q13: What is the tax treatment if an NRI receives insurance proceeds in a foreign currency?

A: Insurance proceeds from Indian policies are paid in Indian Rupees (INR) and credited to the nominee's or policyholder's Indian bank account (NRE/NRO). The tax treatment is determined under Indian tax law in INR -- the currency of receipt does not change the tax treatment. If the NRI subsequently repatriates the funds abroad, the conversion to foreign currency is a separate transaction. Any exchange rate gain or loss on repatriation is generally not separately taxable under Indian tax law for insurance proceeds, though it may have implications under the tax law of the country of residence.

Q14: Are riders (accidental death, critical illness) on NRI policies treated differently for tax purposes?

A: Premium paid for riders is generally not eligible for Section 80C deduction -- only the base life insurance premium qualifies. However, the premium paid for a standalone critical illness health insurance rider may qualify for Section 80D deduction if it meets the criteria. The claim proceeds from riders follow the same tax treatment as the base policy under Section 10(10D) for life insurance riders, while health-related rider payouts are generally tax-free.

Q15: Should an NRI buy insurance in India or in their country of residence?

A: This is not an either/or question. The optimal approach for most NRIs is:

• Term life insurance in India for cost efficiency and to cover India-based liabilities and dependents
• Term life insurance in the country of residence if you have local liabilities (mortgage, car loans, local dependents)
• Health insurance in the country of residence for day-to-day medical needs (this is essential and cannot be substituted with Indian coverage)
• Health insurance in India for parents residing in India and for personal coverage during visits
• Do not use Indian insurance as an investment vehicle -- keep insurance and investment separate

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Final Thoughts: Getting Your NRI Insurance Strategy Right

Insurance planning for NRIs sits at the intersection of Indian tax law, FEMA regulations, IRDAI guidelines, and the tax laws of the country of residence. It is one area where getting professional advice is not a luxury -- it is a necessity.

The core principles remain straightforward:

1. Buy adequate term insurance -- cover should be 10-15 times your annual income
2. Secure health insurance for your parents in India and for yourself during visits
3. Do not mix insurance with investment -- keep them separate for optimal outcomes
4. Disclose your NRI status to every insurer -- no exceptions
5. Route all premium payments through NRE or NRO accounts
6. Review your portfolio annually with a qualified advisor who understands both Indian and international tax implications
7. Keep meticulous records of all policies, premiums paid, and correspondence

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Need Expert NRI Insurance & Tax Advisory?

At MKW Advisors, we provide comprehensive NRI advisory services covering insurance portfolio review, tax planning across jurisdictions, FEMA compliance, and investment optimization. Our team of Chartered Accountants, Company Secretaries, and legal professionals ensures that your financial structure is compliant, tax-efficient, and aligned with your long-term goals.

Get started today:

• Book a Consultation
• WhatsApp: +91-96677 44073
• Email: [email protected]

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Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws and regulations are subject to change. NRIs should consult a qualified Chartered Accountant or tax advisor for advice specific to their individual circumstances. The information presented is based on laws and regulations applicable as of March 2026.

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Related Reading:

• NRI Tax Filing Guide 2026
• FEMA Compliance for NRIs
• Capital Gains Tax for NRIs on Property Sale
• NRO vs NRE Account: Complete Guide

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