May 21, 2024

ULIP Investment for NRI – A Complete Guide

Every year, many NRIs (Non-resident Indians) invest in different investment options in India. And one of the most popular investments among NRIs is the ULIP. According to the FEMA (Foreign Exchange and Management Act), if you have not resided in India for more than 182 days in a specific financial year, you can be considered an NRI. And all NRIs, including PIO (people of Indian origin), are allowed to invest in ULIPs in India. 

Important documents NRIs must submit to invest in ULIP

As an NRI, when you purchase ULIP in India, you must submit an application form along with specific KYC (know your customer) and other documents. The documents required may vary from insurer to insurer. Generally, most insurance companies may require you to submit the following documents:

  • Copy of your passport
  • Proof of identity
  • Proof of residence in India and your country of residence
  • Recent passport-sized photograph
  • Proof of income (salary slips, bank account statement reflecting salary credit, etc.)
  • Proof of your overseas citizenship (for Persons of Indian origin and Overseas Citizens of India)

How can NRIs pay the premium for ULIP?

If you are an NRI and purchase ULIP Insurance in India, you must diligently pay the premium on or before the due date to keep the policy active. You can pay the premium through one of the following methods:

  • Through an Indian bank account 
  • Through your NRE (non-resident external) or NRO (non-resident ordinary) account maintained with an Indian bank

Can NRIs get tax benefits on ULIP investment?

ULIP is one of the few financial instruments in India that enjoys EEE (exempt-exempt-exempt) tax status. And NRIs can enjoy the same tax benefits as applicable to resident Indians. The premium you pay for ULIP is eligible for tax benefits under Section 80C of the Indian Income Tax Act. 

The death benefits your nominee may receive are entirely tax-free under Section 10 (10D) of the IT Act. Lastly, the long-term capital gains you get from your investment are tax-free, subject to specific conditions. 

Why should NRIs invest in ULIP?

ULIP is one of the most popular investment instruments in India. Many people prefer buying ULIP because it offers the highest returns compared to other life insurance products. NRIs, too can benefit immensely by investing in ULIP. If you are sceptical, here are a few reasons ULIPs are a worthy investment for all NRIs. 

India is one of the fastest-growing economies in the world. By investing in different instruments in India like ULIP, you get new opportunities to invest and earn valuable returns. 

The Indian financial market is highly diverse, and it gives NRIs several investment options that you can choose. From market-linked options like ULIPs to fixed income instruments, you do not have a shortage of choices. If you plan your investments in ULIPs meticulously, you can expect to get returns up to 12% over an investment period of ten years. 

By investing in ULIPs in India, you can indirectly invest in the Indian stock market. Also, since professional fund managers manage the investments in ULIPs, you get the advantage of their expertise and knowledge of the Indian market, which significantly increases the possibility of gaining valuable returns. 

Apart from offering returns on investments, ULIP also provides life insurance cover to your family. This means if something happens to you, the insurance company will pay the death benefit to the family. They can use the amount to carry out their regular expenses and maintain their lifestyle even in your absence. 

Final Word

Thus, ULIP is an excellent investment choice for NRIs. It allows you to protect your family’s financial future and, at the same time, build wealth to meet your long-term goals.

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