A Complete Guide to Term Insurance for NRIs Living in the UAE 

Moving to the UAE is the dream of many Indians. You pack up your bags, get ready, and set off on a journey of a lifetime. You work hard, day after day. The why is simple. To provide. To provide your family with a comfortable life. To send your kids to the best schools. To ensure a loan is cleared on time. But what happens if life takes an unexpected turn? Who pays your child’s school fees? Who pays off your home loan installments? This is where life insurance comes to the rescue.

If you are an Indian living and working in the Gulf, this simple guide will help you understand everything about term insurance for NRIs in UAE in plain, easy language. 

What is Term Insurance?

Term insurance is the most basic form of life insurance coverage. You pay a small amount of money to an insurance company, and in turn, they pay your family a large sum of money if the unfortunate, unexpected happens. The regular amount paid to the insurance company is called a premium. The larger amount your family receives if you ever pass is called the sum assured.

If you pass away within the specified time of the policy, the sum assured would be paid to your nominee to help them with daily family expenses, electricity and water bills, children’s education (loan payment if need be), and more.

However, in case you survive the tenure of the policy, your insurance plan will terminate, and you will not receive any payout. But some insurers offer a rider that returns all the money paid (premium) to you in case of survival.

Why Should an NRI in the UAE Buy a Term Plan from India?

The most common question NRIs ask is “Can I not just buy a life insurance policy in the UAE?”

While buying a local term insurance policy is possible,

buying a term plan from India has many advantages

1. Cost-effective

Indian term insurance plans tend to be much cheaper than local or international term insurance policies. Indian plans also offer much higher coverage for a smaller premium.

2. 18% Tax Savings with the GST Waiver

As an NRI based in the UAE or other Gulf countries, you pay an additional 18% GST when you buy a term insurance plan. But if you pay the premium via foreign currency or NRE, the Indian government provides a 0% GST waiver, which is a great deal!

3. Worldwide Protection

The term insurance provided by Indian companies offers worldwide protection. It will cover you wherever you are! If you are in the UAE, India, or even elsewhere, your Indian term policy has got your back.

 

4. Easy Claim Process for Your Family

If your parents, spouse, or kids are based in India, it will be much easier for them to file a claim on your life insurance policy.

How Does Term Insurance for NRIs Work?

Buying a plan while living in the UAE is a seamless digital process. You don’t have to spend thousands of dirhams to fly back home just to buy a term plan. Here are five easy steps to follow:

1. Calculate Your Cover: Know how much cover you need to make sure your loved ones can continue enjoying the same lifestyle. Experts suggest 10x to 15x your annual income. For example, if your salary is AED 50,000, a term insurance cover of AED 500,000 to AED 750,000 would be appropriate.
2. Compare Term Insurance Quotes Online: Once you know the appropriate sum assured, compare online term insurance quotes from different companies to find the best deal.
3. Fill Out The Proposal Form: Fill in all the personal details, salary, passport details, and more.
4. Video KYC: Complete e-KYC by recording a short video on your mobile.
5. Medical Test: Some insurers allow telemedical consultations; others may require a health test at the nearest medical center in Sharjah/Dubai.

Documents Required 

Here are a few standard documents that you will need to submit while applying for term insurance:

• Passport: Front and back pages. 
• UAE Residence Visa: Copy of a valid visa. 
• Income Proof: the last three months’ salary slips or bank account statement for the last six months. Address Proof: Contract of employment, tenancy, or electricity bill. 
• Passport-size photo: Scan of a recent passport-size photo. 

NRE vs NRO Account: Know the Difference

Understanding bank accounts is very important for every NRI.

• NRE Account (Non-Resident External): Money in this account comes from your earnings in the UAE. If you pay your insurance premium using an NRE account, you get the 0% GST waiver. Also, if a claim is paid out, your family can send that money anywhere in the world without hassle.
• NRO Account (Non-Resident Ordinary): Money in this account comes from Indian sources like rent or dividends. You can still pay your premium from an NRO account, but you might miss out on the 18% GST discount.

Top Tip: Always pay your premiums through your NRE account to save taxes and keep money transfers simple.

Top Riders To Add To Your Term Policy

You can also add the following optional benefits (riders) to your term life insurance policy:

1. Critical Illness Cover: This rider provides a lump-sum payout if diagnosed with a life-threatening illness such as heart disease and cancer.
2. Accidental Death Cover: An additional payout is made to your nominees in the event of death due to an accident.
3. Waiver of Premium: The rider covers all future premiums in case of total and permanent disability.

Things To Remember Before Buying Term Insurance for NRIs in UAE

To help you make the right choice before buying term insurance for NRIs in the UAE, consider the following:

First and foremost, you should be an Indian citizen, OCI (Overseas Citizen of India), or PIO (Person of Indian Origin) between the ages of 18 and 65 years. Next, invest in a sufficient cover (ideally, ₹1 crore or higher) to meet your family’s daily requirements and aspirations. Lastly, remember to make the premium payments from your NRE account to claim the 18% GST exemption. In addition, remember to complete the medical examination as soon as possible via video KYC or by visiting the nearest medical centre.

Conclusion

Living outside one’s home country is never easy. People who reside in the UAE work tirelessly so their families back home can have the best life possible. But how can you ensure your family can enjoy that luxurious lifestyle if something were to happen to you? By investing in the right term insurance for NRIs in the UAE. It will only cost you a few dirhams every day, but it will provide lifetime income security for your loved ones and give you much-needed peace of mind.