Buy a Life Insurance Plan in a few clicks
Kotak Guaranteed Fortune Builder
A plan that offers guaranteed income for your future goals.
Kotak e-Term
Protect your family's financial future.
Kotak Assured Savings Plan
A plan that offer guaranteed returns and financial protection for your family.
Kotak Guaranteed Savings Plan
A plan that offers long term savings and life cover.
Kotak e-Invest
Insurance and Investment in one plan.
Kotak Lifetime Income Plan
Retirement years are the golden years of life.
Thank you
Our representative will get in touch with you at the earliest.
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
ULIP tax benefits for NRIs are tax benefits on the premiums paid and tax benefits on the maturity and claims post-demise of the policyholder.
Updated on: 11th August, 2023
Indian citizens who have shifted abroad and are residing out of the country for a short tenure are called Non-Resident Indians or NRIs. Being Indian citizens, they can avail themselves most of the benefits allocated to an Indian citizen. Similarly, they entertain the full right to invest money in India and enjoy various investment benefits.
The various tax advantages that NRIs can avail themselves of when investing in ULIPs are:
An NRI is eligible to use all the tax benefits on their investments in India. Unit Linked Insurance Plans, abbreviated and popularly known as ULIPs, have become a popular investment option among NRIs.
Let us look at the ULIP tax benefits available for NRIs and how they can be helpful for them.
As a ULIP policyholder, an NRI can avail of tax exemption on their plan under the guidelines of the Income Tax Act 1961. This allows them to save more money because investing in ULIPs gives them the option to save more tax.
So, an NRI can opt for different financial avenues in India to build more on their savings. This not only allows them to be assured of their financial growth and stability but, at the same time, allows them to build up a decent corpus back at their home while saving income tax.
There are two types of ULIP tax benefits for NRIs. They are:
Here are the details of the benefits that fall in these two categories:
One of the primary tax benefits of investing in ULIPs for NRIs is the tax exemption on the maturity amount. According to Section 10(10D) of the Income Tax Act, any sum received by the policyholder upon maturity of the ULIP is entirely tax-free. This means that NRIs can enjoy the entire maturity amount without any tax deduction, making ULIPs an attractive long-term investment option for them.
NRIs can also benefit from tax deductions on their taxable income by investing in ULIPs under Section 80C of the Income Tax Act. Currently, NRIs can claim a deduction of up to ₹1.5 lakhs on the premium paid for ULIPs in a financial year. This deduction is applicable to the total premium paid for all life insurance policies, including ULIPs, provided it does not exceed the prescribed limit.
ULIPs offer the flexibility of partial withdrawal after the lock-in period, which is usually five years. The amount withdrawn is tax-free, making it a useful feature for NRIs who may require funds for emergencies or other financial needs. This tax benefit can help NRIs effectively manage their finances and fulfil unexpected expenses without any tax implications.
ULIPs provide investors with the option to switch between different investment funds based on their risk appetite and market conditions. NRIs can avail of this feature without incurring any tax liability on the gains made during the switching process. This tax-free fund switching allows NRIs to maximize their returns and optimize their investment portfolio.
In the unfortunate event of the policyholder’s demise during the policy term, the nominee receives the death benefit. The death benefit received by the nominee is exempt from income tax under Section 10(10D). This ensures that the sum assured, along with any bonuses or investment gains, is entirely tax-free for the nominee, providing financial security to the family of the deceased NRI policyholder.
Foreign Exchange Management Act (FEMA) allows NRIs to invest in India. However, investing in India as an NRI involves an elaborated documentation procedure that one must know about. As FEMA allows investment in ULIP policies, it also opens the door to ULIP tax benefits for NRIs.
So, if an NRI wants to take the tax benefits of ULIP policies, they must look for the right ULIP policy that best matches their financial requirements. Once the ULIP policy is finalized, NRIs will be required to fill out the policy application form and provide the below-mentioned documents:
NRIs interested in securing their financial future through ULIPs can conveniently pay their premiums using multiple modes that cater to their specific needs and locations. We will now explore the various modes through which NRIs can pay their ULIP premiums.
In the digital age, online payment has become the most accessible and widely-used mode of paying ULIP premiums for NRIs. They can easily access their insurance provider’s website or mobile app and make premium payments using their international debit or credit cards. Additionally, they may have the option to transfer funds from their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank accounts directly to the insurer’s account.
For NRIs who prefer a hassle-free payment process, the Electronic Clearing Service (ECS) is a convenient option. By linking their NRE/NRO bank account to the ULIP policy, the premium amount will be automatically deducted from their account on the due date. This ensures timely payments without the need for manual intervention.
For NRIs who prefer to make bulk payments or have significant funds in their foreign accounts, SWIFT (Society for Worldwide Interbank Financial Telecommunication) transfer is a viable option. Through this mode, they can transfer funds from their foreign bank account to the insurance company’s account directly. It is essential to provide the correct policy details and SWIFT code to ensure smooth and accurate transactions.
Many insurance providers have dedicated NRI service centers to cater specifically to the needs of non-resident customers. NRIs can visit these centers or reach out to them via phone or email to get assistance with their premium payments. These service centers can guide NRIs through the payment process, address their queries, and offer personalized solutions.
In certain cases, NRIs might prefer to seek assistance from authorized agents or representatives of the insurance company. These agents can help NRIs understand the payment options available to them, complete the necessary paperwork, and ensure that their premium payments are processed smoothly.
Overall, ULIP tax benefits for NRIs are a great way to save taxes in India. Also, along with market-linked investment options, NRIs get the added benefit of life insurance with ULIP. This makes ULIP an excellent choice for investment in India while allowing tax benefits on your hard-earned money.
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999