For Non-Resident Indians (NRIs), securing health and term insurance for themselves and their families back in India is more than just a financial obligation—it is a critical step toward safeguarding their loved ones and managing long-term security. As global citizens, NRIs often weigh the pros and cons of buying insurance in their country of residence versus opting for policies in India. What tips the scale in favor of Indian insurance are three strong reasons: affordability, extensive coverage, and significant tax benefits. Indian insurance companies offer health and term insurance plans that are often more economical than global alternatives. These plans are tailored to suit Indian needs and come with value-added benefits that are increasingly appealing to NRIs—especially those who wish to ensure their family back home remains financially secure.

GST Refund on Health and Term Insurance Premiums for NRIs
Health and term insurance policies issued in India typically attract an 18% Goods and Services Tax (GST). However, in an effort to attract NRIs to invest in Indian insurance products, the Indian government allows a GST refund on these policies—provided certain criteria are met. This refund lowers the overall cost of the policy, making Indian insurance even more competitive globally.

Here are the eligibility conditions NRIs must meet to avail the GST refund:

1. The policy proposer must be an NRI and also an insured person:
   This means NRIs can buy insurance for themselves or their family in India, but they must also be covered in the policy to claim the GST refund.

2. The premium must be paid through an NRE (Non-Resident External) account:
   This ensures that the payment qualifies under FEMA (Foreign Exchange Management Act) regulations and is eligible for the GST refund.

3. The premium must be paid on an annual basis:
   Monthly or quarterly premium payments are not eligible for GST refunds. Only annual premium payments qualify for the exemption.

Once these conditions are satisfied, the policyholder must submit standard KYC (Know Your Customer) documents to the insurance provider, which usually include:

• Copy of PAN card

• Valid Indian and foreign address proof

• NRE bank account statement

• Passport and visa with entry/exit stamps

Once processed, the GST refund is typically credited back within 15 working days, depending on the insurer’s internal policy.

Tax Benefits for NRIs on Indian Insurance Policies

Apart from the GST advantage, another major reason NRIs choose Indian insurance is the tax benefits they can avail under the Indian Income Tax Act—particularly Section 80C, Section 80D, and Section 10D.

1. Section 80C – Life and Term Insurance Premiums:
Under this section, NRIs can claim a deduction of up to ₹1.5 lakh per year for premiums paid towards life insurance, including term plans. This deduction applies under the old tax regime and helps reduce the policyholder’s taxable income, leading to substantial tax savings.

2. Section 80D – Health Insurance Premiums:
This section offers deductions for premiums paid towards health insurance policies for:

• Self, spouse, and dependent children: Up to ₹25,000 per year

• Parents (below 60 years): Additional ₹25,000

• Parents (senior citizens above 60 years): Up to ₹50,000

So, if an NRI buys health insurance for themselves and their senior citizen parents, they can claim a total deduction of ₹75,000 to ₹1,00,000, depending on the eligibility.

3. Section 10D – Term Insurance Death Benefit:
If the policyholder passes away, the entire sum assured received by the nominee is completely tax-free under Section 10D. This is a critical benefit, ensuring that the family gets the full financial support intended by the policy.

Managing Policies from Abroad

Many insurers in India have developed user-friendly digital interfaces, allowing NRIs to buy, renew, and manage policies online with ease. From downloading policy documents to making secure online payments through NRE accounts, the process is streamlined for global convenience. While multiple payment options like monthly, quarterly, and half-yearly exist, only annual payments qualify for the GST refund, making it essential for NRIs to choose the right frequency based on benefit eligibility.

Choosing Indian insurance is not just an emotional decision to support and protect family members—it's also a practical and financially sound strategy. Here's a recap of why NRIs should consider Indian insurance:

• Lower premium costs compared to foreign policies

• 18% GST refund, reducing policy costs even further

• Substantial tax deductions under Sections 80C and 80D

• Tax-free death benefit under Section 10D

• Online management for ease of access and control

• Protection for aging parents and dependents in India

With these features in place, Indian insurance plans offer NRIs a compelling blend of affordability, ease, and peace of mind—ensuring that no matter where they reside, their family in India is always protected.