Policybazaar rolls out dollar term insurance for NRIs via GIFT City

The offering addresses an often-overlooked risk that can reduce the overseas value of life insurance over time

For Indians living abroad, a life insurance payout can lose value simply because of currency movements.

 

Addressing this gap, Policybazaar has started offering US dollar-denominated term insurance plans of its partner insurers for non-resident Indians (NRIs) through GIFT City.

 

This allows policyholders to pay premiums and receive claim payouts in US dollars instead of Indian rupees.

 

The move is aimed at NRIs whose income, loans and other financial commitments are largely in foreign currency. It also marks another step in GIFT City's push to offer global financial products from within India's regulatory framework.

 

Why is a dollar-denominated policy significant?

 

Most life insurance policies bought in India are issued in rupees. While this works well for residents, it may not be ideal for NRIs who earn and spend in dollars.

 

If the rupee weakens over time against the dollar, the value of a rupee-denominated insurance payout falls when converted into dollars. That means the amount received by a family abroad may not be enough to meet expenses such as mortgage repayments, children's education or everyday living costs overseas.

 

According to Policybazaar, the Indian rupee has depreciated by around 3 per cent annually against the US dollar over the past three decades. The company illustrated that a Rs 2 crore insurance cover, which was worth nearly $550,000 in 1996, is worth only around $200,000 at current exchange rates.

 

Although exchange rates fluctuate over time, the example highlights the impact of long-term currency depreciation on the international value of insurance proceeds.

 

How does the new plan work?

 

Under the offering available through GIFT City's International Financial Services Centre (IFSC), eligible NRIs can:

 

• Pay premiums in US dollars.
• Receive death claim payouts in US dollars.
• Complete onboarding digitally.
• Undergo medical underwriting remotely, subject to eligibility.

 

Keeping both premium payments and claim settlements in the same currency reduces uncertainty arising from exchange rate fluctuations.

 

Who could benefit?

 

The product may be useful for NRIs who:

 

• Earn their salary in US dollars.
• Have overseas home loans.
• Plan to fund children's education abroad.
• Want to leave financial protection for family members living overseas.
• Have long-term liabilities linked to the US dollar.

 

For such individuals, matching insurance cover with the currency of future financial obligations can help preserve the real value of the protection.

 

However, the product may be less relevant for NRIs whose future financial needs are largely in India and are denominated in rupees.

 

What role does GIFT City play?

 

The plans are being offered through GIFT City's IFSC, India's international financial services hub. Over the past few years, GIFT City has emerged as a platform for offering banking, investment and insurance products that are designed for cross-border customers while remaining under India's regulatory ecosystem.

 

Insurance products denominated in foreign currencies have generally been more accessible through overseas financial centres. The latest offering indicates that such products are gradually becoming available through Indian institutions as well.

   

Points NRIs should evaluate before buying

 

A dollar-denominated policy may solve the currency mismatch problem, but it should not be chosen solely because it is available in foreign currency. Prospective buyers should consider:

 

• Whether their future liabilities are primarily in dollars or rupees.
• The adequacy of the sum assured for long-term financial goals.
• Premium affordability over the policy term.
• Eligibility conditions under GIFT City regulations.
• Policy exclusions, waiting periods and claim settlement provisions.
• Tax implications in both India and the country of residence.
•  

 

Comparing the policy with conventional rupee-denominated term plans and overseas insurance options is also important before making a decision.