ULIP Plan for NRI

What is a ULIP Plan for NRI?

ULIP stands for Unit Linked Insurance Plan. A ULIP Plan for NRI is an investment plan that combines life insurance benefits with the best investment options. 

NRIs can invest in ULIP plans in India to receive life coverage while also participating in the financial markets. You can invest in market-linked funds such as equity, debt, or a mix of both. 

The best ULIP plans allow NRIs to switch between funds based on their risk appetite and financial goals. 

The ULIP plan in India also offers tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961.

Features of Best ULIP Plans in India in 2024 for NRI

The key features of best ULIP plans in India are as follows:

• Dual Benefits: A combination of both investment and life insurance in one plan. It provides financial protection for your loved ones in case of unforeseen events.

• Flexible Investment Funds: The NRI can choose between equity, debt, or a mix based on your risk tolerance and changing financial goals.

• Tax Efficiency: An NRI can enjoy tax advantages of up to Rs. 1.5 lakhs p.a. on investment under Section 80C of the Income Tax Act, 1961. Tax-free maturity amount under Section 10(10D) when premium payment is below Rs. 2.5 lakhs annually.

• Wealth Creation: ULIP plan offers higher returns in the long term through the power of compounding.

• Transparent Charges: An NRI can understand all charges, including premium allocation and fund management fees.

• Lock-in Period: Lock-in period of 5 years allows you to build wealth through a long-term investment horizon.

• Partial Withdrawal Facility: The ULIP plans for NRI provide flexibility through partial withdrawals after the 5-year lock-in period.

• Professional Fund Management: ULIP plans are managed by experienced and reputable fund managers.

Why NRIs Should Invest in Best ULIP Plans in India in 2024?

Following are some of the benefits of investing in a ULIP plan in India for an NRI:

1. Flexibility to Switch Funds:

   • You can easily switch between investment funds based on financial goals.

   • It allows an NRI to adapt investment strategy to changing market conditions.

2. Lock-in Period:

   • Enjoy long-term compounding benefits with a 5-year lock-in period.

   • This will help to benefit from the compounding effect of investing small in the long term.

3. Tax Benefits:

   • Avail tax advantages on premium payment as per Section 80C. 

   • Tax benefits on maturity amount under Section 10(10D) of the Income Tax Act, 1961.

4. Rider Options:

   • NRIs can customize their insurance plans with additional riders for enhanced coverage.

   • You can tailor your policies to specific needs with rider options.

5. High Returns:

   • NRIs can explore various investment opportunities with the potential for attractive returns.

   • ULIP allows an NRI to balance risk and reward for optimal wealth accumulation.

6. 150+ Funds:

   • NRIs can diversify their investment portfolio with a wide range of over 150 funds.

   • You can select funds aligning with risk tolerance and financial objectives.

7. Life Cover:

   • You can secure your financial future with life cover integrated into investment plans.

   • The NRI can provide protection to their loved ones while building wealth.

8. Currency Advantages:

   • Investing in Indian plans helps mitigate the risks associated with fluctuating exchange rates.

   • Allows NRIs to benefit from potential currency appreciation by maximizing returns when converted to their home currency.

Types of ULIP Plans in India for NRI

ULIPs are classified based on their purpose and death benefit. Let us learn about them in detail.

1. Goal-Based ULIP Plans:

   • Child Education Plans:

     • Helps NRIs to secure funds for the education of their child.

     • NRIs can avail tax benefits on the premiums paid and the maturity amount under Section 10(10D) of the Income Tax Act.

     • Can be tailored to suit specific needs, providing flexibility in terms of premium payments and coverage.

     • Offers life coverage for the parent to ensure financial protection for the child in case of unforeseen events.

     • Accumulates loyalty additions over the policy term which enhances the overall value of the investment.

     • Provides financial support at key educational milestones.

   • Pension Plans:

     • NRIs can avail of tax benefits on premiums paid and the maturity amount under Section 80C and 10(10D), respectively of the Income Tax Act, 1961. 

     • Offers a reliable source of income post-retirement, which ensures financial stability during the later stages of life.

     • NRIs can enhance coverage with optional riders like disability, critical illness, or income benefits.

     • You can nominate beneficiaries to ensure a seamless transfer of benefits in case of an unfortunate event.

   • Capital Guarantee Plans:

     • Capital Guarantee Plans offer a secure investment option for NRIs in India.

     • The capital invested is protected, ensuring a minimum guaranteed return.

     • NRIs can safeguard their investments from market volatility and economic uncertainties.

     • Ideal for NRIs looking to preserve wealth over the long term with minimal risk.

     • Capital Guarantee Plans offer tax benefits on maturity amount and invested capital.

     • Adds diversification to NRI investment portfolios.

   • Money-Back Plans:

     • Offers a blend of insurance and investment with periodic payouts, which ensures liquidity for NRIs.

     • Assured returns and additional bonuses at predefined intervals for NRIs.

     • Offer tax benefits to NRIs on invested premiums and maturity amount.

     • Also provides life insurance coverage which ensures financial protection for loved ones.

2. Death Benefit Based ULIP Plans

   ULIP plans in India can be categorised as Type 1 ULIP Plan and Type 2 ULIP Plan, based on their death benefits. Let us learn the key difference between them, from the following table: 

   Feature	Type 1 ULIP	Type 2 ULIP
   Lock-in Period	5 years	5 years
   Premium Allocation	Higher premium allocation towards insurance	Lower premium allocation towards insurance
   Death Benefit Payout	Higher of sum assured or fund value	Sum assured + Fund value
   Example of Death Benefit	If Fund Value = Rs. 40 lakhs Sum Assured = Rs. 50 lakhs Death Benefit to Nominee: Rs. 50 lakhs of Sum Assured	If Fund Value = Rs. 40 lakhs Sum Assured = Rs. 50 lakhs Death Benefit to Nominee: Rs. 75 lakhs (Sum Assured + Fund Value)
   Sum-at-Risk	Decreases over time as fund value grows	Remains constant, potentially higher premiums
   Returns	Potentially lower returns	Potentially higher returns

Illustration of a ULIP Plan for NRI

Consider the following conditions for investing in a ULIP Plan-

• Your age = 30 years

• Policy Term (PT) = 20 years

• Premium Amount (annual) = Rs. 50,000

• Premium Payment Term (PPT) = 10 years

1. Policy Details:

   • Initial Sum Assured = Rs. 5,00,000 (yearly premium x 10)

   • Annual Administration and other charges = Rs. 2,500

   • Total Annual Investment = Rs. 47,500

   • Initial NAV Value = Rs. 10

   • Units purchased = (47500/10) = 4,750

2. Final ULIP Returns:

   Death Benefits	Maturity Benefits
   Payment made to the nominee if you die within the policy term = Rs. 5,00,000 (Sum Assured) OR = Fund Value (whichever is higher)	Payment made at the time of maturity if you are alive = Total Fund Value

Who Should Invest in a ULIP Plan?

A Unit Linked Insurance Plan (ULIP) is best for the following category of NRI investors: 

• NRIs seeking investment and insurance in a single plan

• For long-term financial goals

• NRIs comfortable with market-related risks

• NRIs aiming to optimize tax liabilities

• For flexibility in investment choices

• NRIs seeking disciplined saving and investment

Steps to Buy a ULIP Plan for NRI from Policybazaar

Let’s take a look at the steps to purchase the best ULIP plans online:

Step 1: Go to the Policybazaar website to explore and compare ULIP plans suitable for NRIs.

Step 2: Fill in your personal details, including name, contact information, and address, to create an account.

Step 3: Browse through the available ULIP plans and select the one that aligns with your financial goals and risk appetite.

Step 4: Enter the amount you want to invest in the chosen ULIP plan.

Step 5: Fulfil the KYC (Know Your Customer) requirements by submitting the necessary documents, such as identity proof, address proof, and passport.

Step 6: Specify the nominee for the ULIP plan, ensuring smooth claim settlement in case of unforeseen events.

Step 7: Decide on the premium payment frequency, whether monthly, quarterly, or annually, and make the payment through the available online options.

Step 8: Carefully review all the details provided, including the terms and conditions, before confirming your ULIP purchase.

Step 9: Once the payment is processed and documentation is verified, Policybazaar will issue your ULIP policy.

Step 10: Regularly monitor your ULIP investment and utilize online platforms provided by Policybazaar to manage your policy effectively.

Estimate Your Returns with ULIP Plan Calculator

NRIs can estimate their ULIP returns quickly, easily, and hassle-free with a ULIP Calculator. The calculator includes the following factors:

• Amount to invest (monthly/yearly/one-time)

• Policy tenure (investment duration)

• Periodic investment period (premium payment frequency)

• Expected rate of return

The ULIP plan calculator will provide you the following results:

• Total Invested Amount

• Total Returns Earned

Charges Levied on a ULIP Plan for NRI

The following charges are subject to the guidelines set by the Insurance Regulatory and Development Authority of India (IRDAI) to ensure they do not exceed the acquisition cost incurred by the insurer:

Summing It Up

The ULIP Plan for NRIs offers a dynamic and flexible investment-cum-insurance solution. The plan aims to meet the unique financial goals of NRIs, by combining the benefits of market-linked returns with life insurance coverage. With the potential for wealth creation and protection, the ULIP for NRIs serves as a comprehensive financial tool, empowering them to achieve long-term financial security and growth.