Tech & Business

NRIs and ULIPs – Know Eligibility Criteria

Many NRIs wonder whether they can make investments in India. As a matter of fact, NRIs can most definitely invest in Unit Linked Insurance Plans (ULIPs) according to the Foreign Exchange Management Act (FEMA). The ULIP investments are considered to be one of the most popular investment instruments among NRIs as well as many young investors in India.

In this article, we will be discussing the eligibility criteria for NRIs to invest in ULIPs. But before that, let us take a quick look at what ULIPs are.

What is ULIP?

The ULIP plan meaning is Unit Linked Insurance Plans, and it is primarily an insurance instrument available in the market. The policy offers dual benefits of life insurance coverage and wealth creating through investments in market-linked funds.

Here, a part of the premiums paid towards ULIPs is used for life insurance coverage; whereas the remaining portion is used for investing in funds of your choice. ULIPs are one of the most popular investment instruments among young investors and NRIs.

Let us take a look at the eligibility criteria for NRIs to be able to invest in ULIP investments in India.

Eligibility Criteria for NRIs

To be able to invest in ULIPs in India, NRIs have to submit a set of documents. Usually, the set of requested documents could vary depending on the insurer.

But there are certain standard documents that one needs to submit –

  • Scanned copies of your passport that shows proof of age and identity
  • Your latest passport-sized photograph
  • Residential proof in India
  • Residential proof overseas
  • Income proof (depending on the insurer)
  • Overseas Citizenship of India (OCI) or Persons of Indian Origin (PIO) Card in case you are a permanent overseas resident
  • A Foreign Residency Supplementary Questionnaire for NRIs or PIOs

Apart from these documents, NRIs planning to invest in ULIPs in India should be aware of the other rules and conditions, benefits associated with the finances, etc.

How can NRIs pay ULIP premiums?

If you are an NRI who is planning to invest in ULIPs in India, here’s how you can pay the premiums –

  • You can either pay the ULIP premiums via an Indian bank account or
  • Pay ULIP premiums through an NRE account or NRO account maintained by an Indian Bank

What are the different modes of payment that NRIs can use to invest in ULIPs?

NRIs can use the following modes of payment when investing in ULIPs in India –

  • Domestic or international credit cards
  • Internet banking
  • Debit cards
  • Online wallets such as Paytm and Google Pay
  • Credit Card Standing Instructions (CCSI)
  • National Automated Clearing House (NACH)
  • Online ECS Mandate

Benefits of Investing in ULIPs for NRIs

The following are the benefits that NRIs can reap when investing in ULIPs in India.

  • NRIs can enjoy optimum ULIP returns when invested in long-term ULIPs
  • They can also enjoy tax benefits on the premiums paid towards ULIP investments under Section 80C and Section 10(10D) of the Income Tax Act, 1961
  • Since ULIP comes with a 3-5 year lock-in period, it acts as a long-term investment and helps achieve future financial goals
  • It allows you to enjoy dual benefits – life insurance cover and investment – all under a single policy

The Conclusion

ULIPs help in building wealth over time and financially secures your loved ones. Moreover, NRIs can also avail the ULIP funds switching facility that helps you alter your investment portfolio to yield reasonable returns. You can also enhance the coverage of the policy with rider benefits such as critical illness cover and accidental death cover. In all, ULIPs are a great investment strategy for NRIs and investors in India as well.

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