Why life insurance from India makes sense for NRIs in Canada?
Given below are some reasons which make life insurance a suitable choice for NRIs living in Canada -
Lower Premiums:
One of the primary benefits of purchasing a policy in India is its affordability. You get access to a variety of plan at affordable premiums. In fact, there might be a cost difference on term plans of 50% to 60% from the developed countries.¹
NRIs can buy life insurance in India without paying GST. This means they receive an 18% GST benefit (subject to eligibility conditions and submission of required documents every year), which substantially lowers the policy cost.²
Indian Nominee Advantage:
If you're an NRI living in Canada, and you have your family or dependents in India, buying a policy here can offer practical benefits. For instance, the claims here can be settled in INR. This makes it easy for nominees from India to access the funds. Additionally, the claim settlement can be relatively faster due to access to local bank accounts. Nominees need not go through the hassle of cross-border transactions, paperwork, tax regulations, and much more.
Currency Leverage: CAD to INR:
Another prominent benefit of buying a life insurance plan in India is that it can help NRIs benefit from currency exchange rates. Let's explore how.
- If your residence country has a currency that is stronger than the Indian rupee, you may exchange your foreign earnings for a larger Indian denomination.
- This, in turn, can make policy premiums look affordable to you. Additionally, with increased purchasing power, you may secure a better policy with wider coverage and benefits.
- Furthermore, with a death benefit in Indian rupees, dependents need not worry about currency fluctuations that could impact the benefit in a foreign currency.
Different Plans for Different Needs
Whether you want to buy a plan for providing financial security or you want to create a corpus for your family’s financial goals, life insurance can provide the solution. For instance,
- Term insurance plans help you secure your family’s finances in your absence.
- If you want to plan for your child’s higher education, you can opt for child based insurance plans
- Annuity plans come in handy if you are thinking of retiring in India and want to build up a retirement corpus.
- Life insurance plans like ULIPs offer life coverage and an exposure in Indian markets through market linked funds.
You can compare these plans and pick one or more depending on your needs to create a well-rounded financial portfolio.
The Tax Advantage
Life insurance offers valuable financial protection, and the associated tax benefits further enhance its appeal .. Here’s what you can bank on:
- The premium that you pay qualifies as a deduction under Section 80C up to ₹1.5 lakhs5. This comes in handy if you have a source of income in India on which you are liable to pay tax. The deduction can reduce your tax liability and help you save.
- The death benefit is always tax-free4.
- The maturity benefit received is also tax-free under Section 10(10D), subject to specific terms and conditions3. This gives you and your loved ones a tax-efficient corpus for your needs.
Conclusion
NRIs may buy life insurance in India to earn a variety of benefits. Whether it's affordability, coverage, or simply the need to financially secure your family, the benefits are numerous. However, before buying a policy in India, ensure you understand the policy costs, expenses related to the medical examination, and tax regulations in your residence and home country.
FAQs
Is it compulsory for NRIs to be in India while buying a life insurance plan?
No, NRIS don't need to be in India while buying a life plan. You can check and purchase the available options online.
Can NRIs buy life plans in India?
Yes, as per FEMA, all persons of Indian origin, be it Persons of Indian Origin (PIOs) or NRIs, are allowed to buy a life plan in India.
