Why NRIs Need Health and Life Insurance in India
NRIs are fully eligible under FEMA and IRDAI rules to buy health and life insurance directly from Indian insurers, with premiums payable through NRE or NRO accounts. Health premiums qualify for a deduction of up to INR 25,000 under section 126 of the Income-tax Act, 2025 (section 80D of the Income-tax Act, 1961) — INR 50,000 if the insured is 60 or above, capped at INR 1,00,000 total — and life insurance premiums qualify for up to INR 1,50,000 under section 123 of the 2025 Act (section 80C of the 1961 Act). Both benefits apply only under the old tax regime.
Under the Foreign Exchange Management Act (FEMA) and IRDAI regulations, NRIs are fully eligible to purchase both health and life insurance policies from Indian insurers. Premiums can be paid through NRE or NRO accounts, and policy management is increasingly digital — meaning you can buy, renew, and claim without visiting India.
This guide covers everything NRIs need to know: the best health and life insurance plans available in 2025-26, tax deductions under sections 126 and 123, eligibility criteria, premium payment mechanics, claim processes, and common pitfalls to avoid.
NRI Eligibility for Indian Insurance Policies
IRDAI and FEMA Framework
The Insurance Regulatory and Development Authority of India (IRDAI) permits NRIs to purchase health and life insurance policies from any licensed Indian insurer. There is no separate licensing requirement — NRIs buy the same plans as resident Indians, with minor procedural differences.
Key eligibility requirements include:
- Valid Indian identity proof: PAN card (insurer KYC, including PAN, is mandatory for new policies), Aadhaar (if available), and passport
- KYC compliance: Overseas address proof, visa copy, and passport details
- NRE/NRO account: Premium payments must be routed through Indian banking channels — cash payments are not eligible for tax deductions
- Age limits: Most health insurance plans accept NRIs aged 18-65 at entry; some senior citizen plans extend to age 75
Existing Policies When You Become an NRI
If you held health or life insurance policies while resident in India, these continue without interruption after you move abroad. You do not need to surrender or convert existing policies. LIC and other insurers allow NRIs to continue paying premiums from NRE/NRO accounts and receive maturity or claim proceeds into these accounts.
Best Health Insurance Plans for NRIs in 2025-26
Choosing the right health insurance requires evaluating your family's specific needs — age profile, pre-existing conditions, hospital preferences, and whether you need coverage during India visits or year-round for family members residing in India.
Top Health Insurers for NRIs
These are illustrative planning ranges, not published survey data. Get current quotations for your own situation before putting them into a budget.
| Insurer | Key Plan | Sum Insured Range | NRI-Specific Features |
|---|---|---|---|
| Star Health | Family Health Optima | INR 5 lakh – 1 crore | Extensive cashless hospital network, senior citizen plans to age 75 |
| Niva Bupa | ReAssure 2.0 | INR 3 lakh – 3 crore | Global coverage option, unlimited restoration, tele-consultation |
| Care Health | Care Supreme | INR 5 lakh – 6 crore | Pre-existing disease cover from day 1 (at additional premium), no medical check-up till age 60 |
| ICICI Lombard | Elevate | INR 5 lakh – 5 crore | Large cashless hospital network, fast claim approval, wellness benefits |
| HDFC Ergo | Optima Secure | INR 3 lakh – 1 crore | Annual health check-ups, restoration benefit, daycare procedures |
Types of Health Plans NRIs Should Consider
1. Family Floater Plans: Ideal if your spouse, children, or parents reside in India. A single policy covers the entire family with a shared sum insured. Star Health Family Optima and Niva Bupa ReAssure are popular choices.
2. Senior Citizen Plans: If your parents are above 60 and reside in India, dedicated senior citizen plans from Care Health and Star Health accept new enrolments up to age 75 with co-payment options of 10-20%.
3. Critical Illness Plans: These provide lump-sum payouts on diagnosis of specified critical illnesses (cancer, heart attack, kidney failure, etc.). Useful as a supplement to a base health plan.
4. Top-Up and Super Top-Up Plans: Cost-effective way to increase coverage. A super top-up with INR 10 lakh cover on top of a base INR 5 lakh policy typically costs a small fraction of the equivalent increase in base cover.
Key Factors for NRI Health Insurance Selection
- Hospital network: Check if the insurer has cashless tie-ups with hospitals near your family's residence
- Pre-existing disease waiting period: Standard is 2-4 years; some plans offer day-1 cover at higher premiums
- Restoration benefit: Ensures the sum insured is replenished if exhausted during the policy year
- No-claim bonus: Most plans increase sum insured by 10-50% for each claim-free year
- Room rent capping: Avoid plans that cap room rent — this triggers proportionate deductions on entire claims
Best Life Insurance Plans for NRIs in 2025-26
Life insurance for NRIs in India serves two purposes: financial protection for dependents in India and tax-efficient savings. Under FEMA regulations, NRIs can purchase any life insurance product from licensed Indian insurers.
Types of Life Insurance Available
1. Term Insurance: Pure protection plans offering the highest cover at the lowest premium. Term cover quotes for NRIs depend on age, health, smoking status, and country of residence. Top providers include ICICI Prudential iProtect Smart, HDFC Life Click 2 Protect, and Tata AIA Sampoorna Raksha.
2. Endowment and Money-Back Plans: Combine insurance with savings. LIC's Jeevan Anand and New Endowment Plan remain popular among NRIs due to LIC's sovereign backing and guaranteed returns.
3. Unit-Linked Insurance Plans (ULIPs): Market-linked plans offering insurance plus investment, with a 5-year lock-in. Maturity proceeds are tax-exempt only if the aggregate annual premium across all your ULIPs does not exceed INR 2.5 lakh (for policies issued on or after February 1, 2021); above that threshold the gains are taxable. HDFC Life ProGrowth Plus and ICICI Pru Signature are competitive options.
4. Whole Life Plans: Provide coverage until age 99-100 with a savings component. LIC's Jeevan Umang offers lifelong coverage with annual survival benefits after the premium-paying term.
LIC Policies for NRIs
LIC — India's largest life insurer — maintains a dedicated NRI corner. Key points for NRI policyholders:
- Existing policies continue in Indian currency even after becoming an NRI
- New policies can be purchased by visiting any LIC branch in India with NRI documentation
- Premium payment accepted via NRE/NRO accounts, demand drafts, or online banking
- Maturity and death benefit proceeds credited to the NRI's NRE/NRO account
- GST exemption on individual life insurance policies issued or renewed on or after September 22, 2025
Premium Payment Mechanics for NRIs
NRIs can pay insurance premiums through:
- NRE account: Premiums paid from NRE accounts — maturity proceeds are fully repatriable
- NRO account: Premiums paid from NRO accounts — maturity proceeds are repatriable up to USD 1 million per financial year
- Online banking: Most insurers now accept online payments from NRI accounts
- Standing instructions: Set up auto-debit to avoid policy lapse due to missed premiums while abroad
Tax Benefits on Health Insurance: Section 126 (Section 80D of the 1961 Act)
Section 126 of the Income-tax Act, 2025 provides tax deductions for NRIs on health insurance premiums paid to Indian insurance companies. This is available only under the old tax regime — the new tax regime does not permit section 126 deductions.
Section 126 Deduction Limits for FY 2026-27
| Category | Age of Insured | Maximum Deduction |
|---|---|---|
| Self, Spouse, Children | Below 60 years | INR 25,000 |
| Self, Spouse, Children | 60 years or above | INR 50,000 |
| Parents | Below 60 years | INR 25,000 |
| Parents | 60 years or above | INR 50,000 |
Maximum total deduction: Up to INR 1,00,000 per financial year (if both the insured and parents are senior citizens aged 60+).
Key Conditions for Claiming the Section 126 Deduction
- The premium must be paid through banking channels (cheque, online transfer, debit/credit card) — cash payments are not eligible
- The policy must be from an Indian insurance company registered with IRDAI
- Only the person paying the premium can claim the deduction
- Preventive health check-up expenses up to INR 5,000 are included within the overall limit
- The deduction is available only if you file returns under the old tax regime
Section 126 for NRIs: Practical Scenarios
Scenario 1: NRI (age 40) pays INR 22,000 for family floater covering spouse and children, plus INR 35,000 for parents' senior citizen plan. Total deduction: INR 22,000 + INR 35,000 = INR 57,000.
Scenario 2: NRI (age 62) pays INR 48,000 for self and spouse (senior citizen plan), plus INR 50,000 for parents' plan. Total deduction: INR 48,000 + INR 50,000 = INR 98,000.
Scenario 3: NRI pays INR 25,000 for self plus INR 50,000 for parents (60+) plus INR 5,000 for preventive health check-up. Total deduction: INR 75,000 (check-up is within the overall limit, not additional).
Tax Benefits on Life Insurance: Section 123 and the Schedule II Exemption
Life insurance premiums qualify for tax deductions under section 123 of the Income-tax Act, 2025 (section 80C of the 1961 Act), while maturity proceeds may be tax-exempt under Schedule II (Table: Sl. No. 2) of the 2025 Act (section 10(10D) of the 1961 Act).
Section 123 Deduction
NRIs can claim a deduction of up to INR 1,50,000 per financial year under section 123 for life insurance premiums paid. This limit is shared with the other eligible investments listed in Schedule XV of the 2025 Act, such as PPF, ELSS mutual funds, NSC, and tuition fees. Again, this deduction is available only under the old tax regime.
Maturity Proceeds Exemption (Schedule II)
The maturity benefit, death benefit, and accrued bonuses from life insurance policies are tax-exempt under Schedule II (Table: Sl. No. 2) of the Income-tax Act, 2025 (section 10(10D) of the Income-tax Act, 1961), subject to conditions:
- For policies issued on or after April 1, 2012: the annual premium must not exceed 10% of the sum assured
- For ULIPs issued on or after February 1, 2021: proceeds are taxable if the aggregate annual premium across all ULIPs exceeds INR 2.5 lakh
- For other life policies issued on or after April 1, 2023: proceeds are taxable if the aggregate annual premium across such policies exceeds INR 5 lakh
- Death benefits are always fully exempt regardless of premium amount
TDS on Insurance Proceeds for NRIs
Unlike resident Indians, NRIs face TDS (Tax Deducted at Source) on insurance maturity proceeds if the proceeds are taxable. Tax is deducted under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961) at the rates in force — generally 30% plus applicable surcharge and cess on the taxable portion, unless a lower rate applies under the relevant DTAA. Exempt proceeds should not suffer TDS: if the insurer proposes to deduct tax on an exempt payout, obtain a nil-deduction certificate under section 395 of the 2025 Act or claim a refund in your return. When the proceeds are remitted abroad, Forms 145 and 146 (formerly Forms 15CA and 15CB) apply to the remittance.
Old Tax Regime vs New Tax Regime: Impact on Insurance Deductions
The choice of tax regime significantly impacts the value of insurance-related deductions for NRIs.
| Feature | Old Tax Regime | New Tax Regime (Default from FY 2023-24) |
|---|---|---|
| Section 126 (80D) — Health Insurance | Available: up to INR 1 lakh | Not available |
| Section 123 (80C) — Life Insurance | Available: up to INR 1.5 lakh | Not available |
| Schedule II Exemption (10(10D)) — Maturity Proceeds | Available | Available |
| Standard Deduction | INR 50,000 | INR 75,000 |
| Basic Exemption Limit | INR 2.5 lakh (the higher senior-citizen limits apply only to residents, not NRIs) | INR 4 lakh (all ages, FY 2025-26 onward) |
When the old regime makes sense: If your total deductions (life and health insurance premiums, education-loan interest and others) exceed INR 2 lakh, the old tax regime typically results in lower tax liability. NRIs with significant insurance premiums, home loan interest (section 22 of the Income-tax Act, 2025; section 24 of the Income-tax Act, 1961), and other deductions should run a comparative calculation before filing.
Claims Process for NRIs
Health Insurance Claims
NRIs can file health insurance claims in two ways:
Cashless Claims: If the hospital is in the insurer's network, the insurer settles bills directly with the hospital. Your family member needs to show the health card at the hospital, and the TPA (Third-Party Administrator) handles pre-authorisation.
Reimbursement Claims: For treatment at non-network hospitals, your family member pays upfront and submits bills within 15-30 days for reimbursement. Required documents include discharge summary, bills, prescriptions, and claim form.
Key tip for NRIs: Ensure your family members in India know the insurer's helpline number and have digital copies of the policy document. Most insurers now offer mobile apps for claim tracking.
Life Insurance Claims
Death benefit claims require the nominee to submit the original policy document, death certificate, claimant's identity proof, and the claim form. For maturity claims, the insurer typically sends a notice 2-3 months before maturity, and proceeds are credited to the registered bank account.
FEMA and Repatriation Considerations
Insurance proceeds — whether claim amounts, maturity benefits, or surrender values — are governed by FEMA rules on repatriation:
- NRE-funded policies: Proceeds are fully repatriable without RBI approval
- NRO-funded policies: Proceeds can be repatriated up to USD 1 million per financial year under RBI's remittance-of-assets facility for NRIs (the Liberalised Remittance Scheme applies to residents, not NRIs)
- Documentation: Banks may require Forms 145 and 146, policy documents, and a CA certificate for large remittances
For FEMA and RBI compliance assistance, particularly for large insurance settlements, professional guidance can help streamline the repatriation process.
NRI Insurance for Specific Scenarios
Coverage During India Visits
NRIs who visit India periodically need short-term health coverage to avoid out-of-pocket expenses during medical emergencies. Options include:
- Travel insurance with medical cover: Most international travel policies include emergency medical coverage in India, but with limits of USD 50,000-100,000 — often insufficient for major procedures
- Annual health plan with global coverage: Plans like Niva Bupa ReAssure 2.0 offer global coverage, meaning you are covered both in India and abroad. This is ideal for NRIs who visit India frequently
- Dedicated NRI visit plans: Some insurers offer short-term plans (30, 60, 90 days) specifically designed for NRI visits, covering hospitalisation and daycare procedures
Insurance for Returning NRIs
If you are planning to return to India permanently, start your health insurance before returning while you are still an NRI. This locks in your coverage without a waiting period. Upon return, inform your insurer about your change in residential status — the policy continues without interruption, and your RNOR (Resident but Not Ordinarily Resident) status does not affect coverage.
Group Insurance for NRI-Owned Businesses
NRIs who own businesses in India should consider group health insurance for their Indian employees. Group plans offer lower premiums per person than equivalent retail policies, pre-existing disease cover from day 1, and tax-deductible premiums as a business expense. Insurers like Star Health, ICICI Lombard, and HDFC Ergo offer customisable group health plans.
Common Mistakes NRIs Make with Insurance in India
1. Letting policies lapse: NRIs often forget renewal dates while abroad. Set up auto-debit from your NRE/NRO account, and register your overseas email and phone number with the insurer.
2. Not disclosing NRI status: Failing to inform your insurer about your NRI status can lead to claim rejection. Always update your residential status with the insurer after moving abroad.
3. Buying duplicate international coverage: If you already have health insurance in your country of residence, you do not need a comprehensive India policy — a top-up plan for India visits may suffice.
4. Ignoring the tax regime choice: Insurance deductions are worthless under the new tax regime. Calculate your total deductions before choosing your regime for the financial year.
5. Insufficient sum insured for parents: A INR 5 lakh policy for senior citizen parents is inadequate in most metro cities. Consider a base plan of INR 10-15 lakh with a super top-up for INR 25-50 lakh.
6. Not nominating correctly: Ensure nominees are updated and correct, especially for life insurance. NRI nominees can receive proceeds in their NRE/NRO accounts.
Key Takeaways
- NRIs are fully eligible to purchase health and life insurance from any IRDAI-licensed Indian insurer, with premiums payable through NRE/NRO accounts
- Section 126 of the Income-tax Act, 2025 (section 80D of the 1961 Act) allows health insurance premium deductions up to INR 1 lakh per year (old tax regime only), while section 123 (80C) provides up to INR 1.5 lakh deduction for life insurance premiums
- For parents in India, a combination of a base health plan (INR 10-15 lakh) plus a super top-up (INR 25-50 lakh) provides optimal coverage at reasonable cost
- LIC policies continue seamlessly after becoming an NRI — premiums and proceeds can be routed through NRE/NRO accounts
- Always compare old vs new tax regime before relying on insurance-related tax deductions
- Set up auto-debit for premium payments and update your NRI status with all insurers to avoid claim rejection
Need help with NRI Extended? Our team handles it.
Tax Advisory for Foreign Investors in IndiaFrequently Asked Questions
Can NRIs buy health insurance in India for parents?
Yes, NRIs can purchase health insurance policies in India covering their parents. Senior citizen plans from Star Health, Care Health, and Niva Bupa accept new enrolments for parents up to age 75. Premiums can be paid from NRE or NRO accounts.
Is Section 80D deduction available for NRIs under the new tax regime?
No. Deductions for health insurance premiums under section 126 of the Income-tax Act, 2025 (section 80D of the 1961 Act) are not available under the new tax regime. NRIs must opt for the old tax regime to claim these deductions. The maximum deduction is up to INR 1 lakh per financial year.
Can NRIs continue LIC policies after leaving India?
Yes, existing LIC policies continue in Indian currency even after the policyholder becomes an NRI. Premiums can be paid from NRE/NRO accounts, and maturity or claim proceeds are credited to the NRI's registered bank account.
How can NRIs pay insurance premiums from abroad?
NRIs can pay insurance premiums through NRE or NRO bank accounts via online banking, demand drafts, or auto-debit instructions. Cash payments are not eligible for tax deductions under section 126 or 123 of the Income-tax Act, 2025 (sections 80D and 80C of the 1961 Act).
Are life insurance maturity proceeds taxable for NRIs?
Maturity proceeds are exempt under Schedule II of the Income-tax Act, 2025 (section 10(10D) of the 1961 Act) if the annual premium does not exceed 10% of sum assured (for policies issued after April 2012). However, proceeds become taxable where aggregate annual premiums exceed INR 2.5 lakh for ULIPs issued on or after 1 February 2021, or INR 5 lakh for other life policies issued on or after 1 April 2023.
What is the TDS rate on insurance proceeds for NRIs?
For taxable insurance proceeds, tax is deducted at source for NRIs at the rates in force — generally 30% plus applicable surcharge and cess on the taxable portion, unless a lower DTAA rate applies. Exempt proceeds should not suffer TDS; a nil-deduction certificate can be obtained where needed, and Form 145 applies when the proceeds are remitted abroad, with a Form 146 certificate only for Part C — a taxable remittance above INR 5 lakh in the financial year that is not covered by an Assessing Officer's certificate.
Can NRIs claim both Section 80C and 80D deductions simultaneously?
Yes, under the old tax regime, NRIs can claim the section 123 deduction of the Income-tax Act, 2025 (section 80C of the 1961 Act; up to INR 1.5 lakh for life insurance premiums) and the section 126 deduction (section 80D; up to INR 1 lakh for health insurance premiums) simultaneously, potentially saving up to INR 2.5 lakh in taxable income.