How to renew your insurance policy in India while living in Canada

As tax season begins in India, many Non-Resident Indians (NRIs) living in Canada face challenges in fulfilling their tax obligations. Navigating India’s tax laws while managing international banking complexities can be overwhelming. Understanding your tax residency status is the first step in ensuring compliance and avoiding unnecessary penalties. Additionally, NRIs must also be aware that the tax season in India often coincides with deadlines for insurance premium payments, making financial planning even more crucial.

Many insurance companies in India require policy holders to renew their policies during the same period, leading to a financial burden for those who need to pay taxes and insurance premiums simultaneously. Since missed insurance renewals can result in policy lapses and coverage gaps, NRIs must stay ahead of their financial responsibilities by ensuring that both their tax filings and insurance payments are completed on time. Failure to do so can lead to penalties, higher renewal costs, and potential difficulties in reinstating coverage.

Insurance renewal challenges for NRIs

For Non-Resident Indians (NRIs), managing insurance policies across borders can be a complex task. From staying updated on renewal dates to handling documentation and payment constraints, NRIs often face unique challenges in ensuring continuous coverage. Differences in regulatory requirements, communication barriers with insurers, and limited access to local banking facilities can add further complications. In this article, we explore the key hurdles NRIs encounter during insurance renewals and provide insights on how to navigate them effectively.

Tedious renewal process

NRIs must complete multiple steps for insurance renewals, including:

• Logging into different insurance portals for each policy.
• Verification of NRI status for eligibility confirmation.
• Updating address proof and identification documents to comply with regulations.

Payment issues for insurance policies

Similar to tax payments, insurance renewals come with financial hurdles:

• Complicated money transfers from Canada to India.
• Failed payments due to international transaction restrictions.
• Delayed processing of payments, leading to policy lapses.

Penalties and coverage gaps

Missing insurance renewal deadlines can have serious repercussions:

• Late renewal fees, increasing overall costs.
• Loss of no-claim bonuses, impacting future premiums.
• Coverage gaps, leaving policyholders unprotected during the renewal process.

Additional hurdles

Other obstacles that NRIs face when managing insurance renewals include:

• Time zone differences make customer support difficult to reach.
• Limited online options, forcing manual intervention for certain policies.
• Requirement for physical presence or power of attorney for key policy changes.

Simplify insurance payments with Beacon

Managing insurance payments shouldn’t be complicated. With Beacon’s India bill Pay, NRIs can handle their insurance renewals seamlessly. Instead of navigating multiple portals and manually tracking due dates, Beacon simplifies the process by allowing users to enter their policy details – provider’s name, policy number, and date of birth – enabling instant payments with just a few clicks.

With over 60 insurance providers onboarded, Beacon’s India bill Pay ensures a hassle-free experience for those managing health, life, and motor insurance for themselves or their families back in India. Users can set up in-app notifications and auto-bill fetch to track due dates automatically and avoid last-minute rushes. Additionally, instant payment confirmations provide assurance that payments have been successfully processed, removing the uncertainty of delayed transactions.

For NRIs juggling multiple financial commitments in India, Beacon’s India Bill Pay offers a convenient way to pay bills directly using Canadian dollars. This eliminates the need for multiple logins or maintaining an NRI account. Whether handling utilities, rent, or essential bill payments, NRIs can manage everything effortlessly from Canada.

Take control of your financial responsibilities, no matter where you are.
With Beacon, staying compliant and insured is simple, not stressful.

Renewing your insurance policy in India from Canada? Maximize your Section 80C tax savings 

For Non-Resident Indians (NRIs) in Canada, you can still avail certain tax benefits in India under Section 80C of the Income Tax Act for life insurance policies. Section 80C of the Income Tax Act offers several avenues for claiming deductions from their gross total income, up to a maximum of ₹1.5 lakh for the financial year 2023-241.

Allowable deductions under Section 80C

• Life insurance premiums: NRIs can claim deductions for premiums paid on life insurance policies for themselves, their spouse, or their children (regardless of the child’s dependency status). The premium amount should not exceed 10% of the sum assured.
• Children’s tuition fees: NRIs can claim deductions for tuition fees paid for the full-time education of up to two children in Indian educational institutions, including play schools and nurseries.
• Principal repayment on home loans: NRIs can claim deductions on the principal amount repaid on home loans taken to purchase or construct residential properties in India. This also includes expenses for stamp duty and registration fees.
• Unit-linked insurance plans (ULIPs): Contributions to ULIPs are eligible for deductions. ULIPs offer both insurance and investment benefits under a single plan with a lock-in period of 5 years. Premiums paid towards oneself, spouse, and children are eligible for deductions.
• Equity linked savings schemes (ELSS): Investments in ELSS qualify for tax deductions, offering potential long-term capital growth. ELSS funds have a mandatory lock-in period of three years.

Key benefits of Section 80C for NRIs

• Tax deductions on premiums: NRIs can claim tax deductions up to ₹1.5 lakh under Section 80C on life insurance premiums paid for policies covering themselves, their spouse, or their children. This deduction applies to various financial instruments, including life insurance policies and Unit Linked Insurance Plans (ULIPs).
• Eligibility for tax benefits: As an NRI life insurance customer, you are eligible for tax benefits on the premiums paid under Section 80C and the money received from your life insurance policies, subject to Section 10(10D).
• Conditions for tax benefits: The tax deductions on life insurance premiums are subject to certain conditions under Sections 80C, 10(10D), 115BAC, and other provisions of the Income Tax Act, 196. It’s advisable to consult a tax advisor for detailed information. The life insurance premium should not exceed 10% of the death sum assured for policies issued after March 31, 2012, and 20% for policies issued before that date.

Important considerations for NRIs

• Residential status: For tax calculation purposes, the relevant authorities will determine your residential status for the particular financial year. You are considered a Non-Resident Indian (NRI) if you do not meet the conditions to be considered an Indian Resident.
• FATCA/CRS: NRIs may need to provide additional details under the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). This includes information such as country of birth, country of residence as per tax law, and Tax Identification Number (TIN).
• Taxability of proceeds: Proceeds from life insurance policies are generally tax-exempt under Section 10(10D) of the Income Tax Act. However, for policies with an aggregate annual premium exceeding ₹5 lakh (excluding ULIPs) purchased after April 1, 2023, the proceeds may be taxable. Death benefits remain fully tax-exempt, regardless of the premium paid.

To claim these benefits, NRIs must provide a Tax Residency Certificate (TRC) to claim treaty benefits and avoid double taxation under the Double Taxation Avoidance Agreement (DTAA).

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