1. India or abroad? How NRIs should think about cover
Direct answer: match the cover to where the risk and dependants sit. Term life should be priced in the cheapest market that will pay out cleanly to your family; health insurance should follow the insured person; and any cover tied to liabilities (a home loan, a business loan) should sit in the same jurisdiction as the liability.
For most NRIs that means a large Indian term policy (premiums are typically a fraction of Gulf or Western quotes), an employer or local health policy where you actually live, and a separate Indian health policy if parents or dependants are in India or you plan to return. Mixing Indian and foreign protection is normal; what matters is that each policy can be claimed by the beneficiaries who actually need it.
2. Term life insurance for NRIs — eligibility, medicals, claims
Direct answer: NRIs are eligible to buy Indian term insurance from most major insurers. Expect tele-medicals or a local medical exam, country-of-residence loading on the premium, and stricter documentation requirements for claims paid abroad.
Practical points: declare your country of residence and occupation accurately at proposal — non-disclosure is the single most common reason claims are rejected. Premiums can be paid from an NRE or NRO account. Sum assured should be calibrated to liabilities (mortgage, education), not a round-number multiple of salary. If the policy is funded from NRE, the proceeds remain fully repatriable. Insurers may require apostilled death certificates and overseas hospital records for claims paid to overseas nominees — build that into your records.
3. Health insurance and the returning-NRI gap
Direct answer: keep an Indian health policy alive even while overseas if you visit India often or plan to return. Buying fresh on return triggers new waiting periods of two to four years for pre-existing conditions; a continued policy carries those waiting periods through.
NRI-friendly Indian health plans cover treatment in India when you visit; some now offer limited overseas coverage. The bigger value is portability — a policy maintained for five years has effectively zero waiting period, which is the difference between immediate coverage and a multi-year gap when you return. Parents-in-India policies are a separate, important purchase that NRIs often delay to their cost. See our return-to-India hub for how this fits the broader transition checklist.
4. Taxation of premiums and proceeds — Section 10(10D) limits
Direct answer: death proceeds and most maturity payouts on genuine life cover are exempt under Section 10(10D), but the exemption is now capped for high-premium policies and for ULIPs issued after the prescribed dates.
Headline rules: maturity proceeds on traditional life policies are exempt only if the annual premium does not exceed 10% of the sum assured (and ₹5 lakh aggregate for recent issues). For ULIPs issued on or after 1 February 2021, exemption is denied if aggregate annual premium exceeds ₹2.5 lakh — those proceeds are taxable as capital gains. Death benefit remains exempt across the board. Premium deduction under Section 80C is available to NRIs who file under the old regime. TDS under Section 194DA applies to taxable payouts.
5. ULIPs and investment-linked plans — the tax reality
Direct answer: for most NRIs, ULIPs and endowment plans are poor wrappers for investment — high charges, low transparency, and post-2021 tax treatment that strips away the historic 10(10D) advantage above ₹2.5 lakh annual premium. Use term + mutual funds instead.
ULIP "tax-free returns" was the original sales pitch; that advantage now exists only inside the ₹2.5 lakh limit. Above it, you pay capital-gains tax on the ULIP and lose the flexibility of a pure mutual-fund SIP. Endowment plans remain exempt within their premium limits but the implied return is typically 4–6% — well below an equity or hybrid mutual fund over comparable horizons. Buy insurance to insure and invest separately.
6. Protecting a cross-border family: nominees vs heirs
Direct answer: a nominee is a custodian to receive the money; the legal heir is whoever inherits under your applicable succession law. For an NRI family with assets and beneficiaries in different countries, the two must be aligned by a will, or the nominee can be sued by the heirs.
For Indian life and health policies: nominate clearly, update after marriage, divorce, births and on return to India. Combine with a will that covers Indian assets — and, where you hold significant assets abroad, a coordinated foreign will. Cross-border probate, forced-heirship in some Gulf jurisdictions and US estate-tax exposure on Indian ULIPs and brokerage all need to be handled at the planning stage. Our succession & estate planning hub walks through wills, nominees and inheritance for NRI families in detail.