Which term insurance plan NRIs should buy?

There are various doubts faced by customers when it comes to buying a term insurance plan

All the doubts must be cleared before buying a term insurance plan in the country of residence. Which is why all of the below stated questions of NRIs have been answered here so that your buy is devoid of any suspicions and confusions. Usually, Insurance-cum-investment products like ULIPs and Endowment plans are not good for insurance needs

As an NRI, should I invest in certain long-term saving plans with life cover or mutual funds?

One of the fundamental beliefs of personal finance is that you should not mix investment and insurance. Insurance and investment products like unit-linked insurance plans (ULIPs) and endowment plans are not good for either insurance or investment. They come with high expense ratios and the amount which gets invested is less than what you intend to. For a life cover, I would suggest you buy a term insurance plan in the country of your residence. As an NRI, if you are looking for investment options in India, then you should consider mutual funds.

If you are looking for stable investments, you could think about debt funds in India. Indian debt funds have given about 8% returns in the past. Moreover, the rupee has been stable against the euro. If you are funding for the long-term and absorb some volatility in short-term returns, equity or hybrid mutual funds are a good option. In the last 20 years, good equity mutual funds in India have given over 20% annualised returns. That combined with the relative stability of rupee versus the euro, you should be able to grow your corpus well with mutual funds based in India.

In what mutual funds a US-based NRI can invest online

FATCA (Foreign Account Tax Compliance Act) regulations require financial institutions dealing with US entities to follow strict compliance and reporting standards. As a result, many mutual funds companies have either closed their funds for the US and Canada based NRIs or imposed strict restrictions. Meanwhile, there are some excellent fund houses which have kept their doors open. Mutual fund companies allow US-based NRIs to invest without restrictions in L&T Mutual Fund, UTI Mutual Fund, Sundaram Mutual Fund and BNP Paribas Mutual Fund. These funds enable NRIs to invest through some online platforms and their websites.

I have NRE (non-resident external) or NRO (non-resident ordinary) accounts in a bank in India, but they do not allow demat accounts for NRI customers. How can an NRI invest in mutual funds in India?

You do not need a demat account to invest in mutual funds in India. You could instead use the availability of an online platform to invest in mutual funds. What you need is the PAN card and a rupee-designated NRE account or NRO account. You would also need to complete your mutual fund know your client (KYC) before you could invest in mutual funds. There are several online platforms allow you to complete the KYC as an NRI.