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Private Placement Life Insurance (PPLI) and foreign life policies for NRIs and Indian families
For an NRI, a life policy issued abroad is a lawful way to hold a global portfolio inside one contract that compounds without an annual Indian tax charge, pays the family directly on death, and can be kept after moving home. For a resident of India the first question is not tax but permission: FEMA keeps the door to a new foreign policy shut without the RBI’s consent. This edition sets out both sides from the statutes, in the words Indian families and their CAs use: ULIP, NRI, RNOR, LRS, Schedule FA, GIFT City.
Hold a foreign policy you never reported? The FAST-DS 2026 window closes on 31 December.
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Research questions · India edition
Welcome. For most Indian families the useful first question is not the product but the person: are you resident in India today, living abroad, or planning to return? Which is closer to you?
General research only. PPLI.com does not arrange or recommend policies.
One moment…
AI assistant · General information only, never personal tax, legal, insurance or investment advice.
As cited in Life Annuity Specialist (an FT Specialist publication) · 28 October 2026
“A new set of decisionmakers is taking over family wealth, and many of them don’t simply inherit their parents’ arrangements. They want to understand the structure before they buy into the relationship.”
Indian law as at 1 November 2026, Financial Year 2026-27, for an individual who owns the policy personally. Section numbers follow the Income-tax Act 1961; the Income-tax Act 2025 applies from 1 April 2026 and renumbers them. The provisions that decide most answers here: 10(10D) is now section 11 with Schedule II, item 2; 56(2)(xiii) is 92(2)(l); 45(1B) is 67(5); 206C(1G) is 394(1); 6(6) is 6(13). They are set out in the table below; the complete renumbering is on the tax page.
PPLI.com is a research publisher. It is not an insurer, an insurance intermediary or an investment adviser, it is not registered with IRDAI or SEBI, and it does not solicit, arrange or recommend insurance in India. Nothing here is an offer of insurance. A resident of India needs the Reserve Bank’s permission to take a new life policy from an insurer outside India.
The long view
Why NRI and cross-border Indian families use a foreign life policy:
tax, FEMA and succession
India has no estate duty, so the question for a family with money in three countries is not tax at death but process: which law governs the money, who receives it, and how long it takes. A single contract with a named nominee answers that in a way a portfolio spread across foreign brokers never does. Tax is the smaller part of the case for most Indian families; for the NRI who will come home, it is the larger part.
PPLI for Indian families: the guide
PPLI in plain English
How the policy works
for an NRI family
Indian law has no product called private placement life insurance. The phrase is a market name for a life policy written for one family, usually for a single large premium, whose value follows a portfolio the insurer holds against it. For an NRI it works in three stages, and each stage has an Indian rule attached.
The full account, with the four Indian rules, is on PPLI under Indian law.
The full account, with the four Indian rules, is on PPLI under Indian law.
01
Place
The premium goes to an insurer abroad, from money earned abroad
While you are non-resident, your foreign income is outside FEMA, so there is no LRS limit, no TCS and no permission to seek. Regulation 4(ii) of the FEMA Insurance Regulations lets you keep the policy after you return. Review your options before you return, in this order: residence status, FEMA eligibility, the contract itself, tax and cost, and only then the decision. See returning to India: the RNOR window.
02
Grow
Tax arrives when money comes out, not every year
The charging provisions tax the amount received under a policy; we found no published CBDT position taxing the growth inside it each year. A premium above ₹5 lakh takes the policy outside section 10(10D), so a surrender in life is taxed at slab rate on the gain. That is deferral, not exemption, and on buy-and-hold equity the policy loses. The figures are on how India taxes a foreign policy.
03
Pass on
One contract, a named nominee, an exempt death benefit
The sum received on death is exempt under the eighth proviso to section 10(10D) whatever the premium, and passes from the insurer to the nominee or trust outside probate. Every year you are ordinarily resident, the policy appears in Schedule FA; the insurer’s country reports it to India under CRS. Privacy is from the public, never from the tax department.
The statutory framework
Indian statutory framework for a foreign life policy (FY 2026-27)
| Rule or event | Income-tax Act 1961 / FEMA authority | Income-tax Act 2025 (from 1 April 2026) | How it applies to an NRI, RNOR or resident |
|---|---|---|---|
| Buying and holding a foreign life policy (FEMA) | FEMA 12(R)/2015-RB, regulations 4 and 4(ii); RBI Master Direction on LRS | FEMA 12(R)/2015-RB continues to govern | An NRI may buy a foreign policy from foreign income: FEMA does not reach it, so there is no RBI permission, LRS limit or TCS. A policy bought while non-resident may be kept after return under regulation 4(ii). A resident of India needs the RBI’s prior permission for a new foreign policy, and life premium is not a permitted LRS purpose. |
| Exemption ceiling on maturity and surrender | Section 10(10D) | Section 11 read with Schedule II, item 2 | Money received in life is exempt only if the annual premium stays within ₹2.5 lakh for a ULIP issued on or after 1 February 2021, or ₹5 lakh for another policy issued on or after 1 April 2023, and within 10% of the sum assured. A PPLI premium is above both ceilings. |
| Surrender or partial withdrawal in life | Section 56(2)(xiii) for a non-ULIP; section 45(1B) for a ULIP | Section 92(2)(l) for a non-ULIP; section 67(5) for a ULIP | Growth inside the policy is not taxed year by year while nothing is received. For an ordinarily resident holder, the amount received less premiums is income from other sources at slab rate if the contract is a non-ULIP, and a capital gain if it is classified as a ULIP. Have your CA classify the contract in writing. |
| Death benefit | Section 10(10D), eighth proviso | Section 11 read with Schedule II, item 2 | The sum received on the death of the insured is exempt whatever the premium. It is paid by the insurer to the named nominee or trust, outside Indian probate. India has no estate duty. |
| Returning NRI: the RNOR window | Section 6(6) read with section 5 | Section 6(13) read with section 5 | A returning NRI who qualifies as resident but not ordinarily resident, usually for two to three financial years, is not taxed in India on policy money that arises and is received outside India, and does not file Schedule FA in those years. |
| Reporting, TCS and FAST-DS 2026 | Schedule FA (ITR-2 and ITR-3); Black Money Act 2015; section 206C(1G); Finance Act 2026 and FAST-DS Rules 2026, G.S.R. 732(E) of 14 August 2026 | Schedule FA; section 394(1) for TCS; FAST-DS Rules 2026 | Every resident and ordinarily resident holder reports the policy in Schedule FA each year, and the insurer’s country reports it to India under CRS. A policy bought with NRI earnings and never listed after return can be declared under FAST-DS 2026 between 16 August and 31 December 2026, for a fee of ₹1 lakh where such assets total up to ₹5 crore. |
Position as at 1 November 2026, for an individual who owns the policy personally. Sources: the Income Tax Department’s text of both Acts, the RBI’s FEMA notifications and LRS Master Direction, the Memorandum to the Finance Bill 2025 and the FAST-DS Rules 2026. The working is on how India taxes a foreign policy, section 10(10D) explained, FEMA, LRS and foreign insurance and FAST-DS 2026.
Four situations
Where do you stand?
The same policy means four different things to four Indian families. Pick the one closest to yours. Each answer gives three short lines taken from our research on Indian law; nothing you pick leaves this page.
Chooser
Four starting points for an Indian family
Your position today
NRI, living abroadNRI planning to returnResident in IndiaResident family with an NRI member
What Indian law says
India taxes a non-resident only on Indian income, and FEMA does not govern your foreign earnings. A policy bought abroad from foreign income needs no RBI permission, no LRS and no TCS, and it is outside Schedule FA while you are non-resident.
What a policy changes
While you stay abroad, the policy’s meaning depends on your host country: nothing to defer in the UAE or Singapore, a chargeable-event regime in the UK, section 7702 and PFIC questions in the US. Its Indian meaning begins the day you decide to come home.
The catch
If you fund the policy from a Dubai or Singapore account and later return, keep the source documents. Schedule FA, CRS and, if a year is missed, FAST-DS will all ask where the premiums came from.
Basis: Income-tax Act sections 5 and 6; FEMA 12(R) regulation 4(ii).
Without JavaScript the NRI answer is shown. These are summaries of general rules as at 1 November 2026, not advice on your position. The full treatment is on the four Indian rules.
Three structures
Offshore PPLI, GIFT City policy or Indian ULIP: three structures compared
| Feature | Offshore PPLI (Singapore, Luxembourg, Ireland, Bermuda, Cayman) | GIFT City IFSC policy (IFSCA IIO) | Domestic Indian ULIP (IRDAI) |
|---|---|---|---|
| Currency and custody | USD, EUR or another currency; the assets sit in a separate account held for the policy by a custodian | USD, and now multi-currency plans; the money sits in the insurer’s own funds | Rupee; the money sits in the insurer’s unit-linked funds |
| Who can buy | An NRI, from foreign income, without RBI permission; the policy may be kept after return under regulation 4(ii). A resident needs RBI permission under regulation 4 | NRIs and foreign nationals. IFSCA says residents may pay under LRS, but FEMA regulation 4 has not been amended: treat the resident route as unresolved and get the bank’s confirmation in writing | Generally open to residents |
| Investment mandate | A separately managed account; the family chooses the strategy and the manager within the insurer’s approved list | The insurer’s fund menu | The insurer’s funds, with switches inside that menu and a five-year lock-in |
| Indian tax on surrender | No exemption at PPLI scale. Non-ULIP: slab rate under section 56(2)(xiii), now 92(2)(l). If classified as a ULIP: capital gain under section 45(1B), now 67(5) | Exempt under section 10(10D) without the premium ceiling, from 1 April 2025; the other conditions still apply | Exempt only if aggregate annual premium stays within ₹2.5 lakh; above it, a capital gain (12.5% on long-term equity gains above ₹1.25 lakh) |
| Indian tax on death | Exempt whatever the premium | Exempt | Exempt |
| Reporting | Schedule FA every year the holder is resident and ordinarily resident; the insurer’s country reports to India under CRS | Issued inside India’s IFSC; confirm the Schedule FA position with your CA | Domestic policy: no Schedule FA |
Position as at 1 November 2026. Minimum premiums are set by each insurer and are not a legal threshold. Detail and sources: PPLI vs ULIP and GIFT City life insurance.
India research
India research, with its sources
Disclosure
FAST-DS 2026: what to declare if you hold a foreign life insurance policy, before 31 December
India research · FY 2026-27
Comparison
PPLI vs ULIP: where the ₹2.5 lakh limit leaves a ₹10 crore family
India research · FY 2026-27
The guide
Private placement life insurance for Indian families and NRIs: structure, rules, cost
Full guide · FY 2026-27
Tax
How India taxes a foreign life insurance policy: NRI, RNOR and resident rules
India research · FY 2026-27
For NRIs
Returning to India: the RNOR window and your foreign life policy
India research · FY 2026-27
Exchange control
Can a resident Indian buy a foreign life insurance policy? FEMA, LRS and the three real routes
India research · FY 2026-27
GIFT City
GIFT City life insurance: IIO policies, offshore PPLI and ULIP compared
India research · FY 2026-27
हिन्दी
हिन्दी संस्करण: भारतीय परिवारों और NRI के लिए PPLI, कर और उत्तराधिकार
Hindi edition
Common questions
Questions Indian families ask first
What is private placement life insurance?
A market name, not an Indian legal category. It describes a life policy written for one family, usually for a single large premium, from an insurer outside India, whose value follows a separately managed portfolio. The Indian ULIP is its distant retail relative. PPLI has nothing to do with PLI, India Post’s Postal Life Insurance.
Can a resident of India buy PPLI?
Not without the Reserve Bank’s specific or general permission under regulation 4 of the FEMA Insurance Regulations, and no general permission is published for a new foreign life policy; life premium is not a permitted LRS purpose. A policy taken while non-resident may be kept after return under regulation 4(ii). The GIFT City route is unsettled.
Is PPLI tax-free in India?
No. At PPLI scale the premium is above both ceilings (₹2.5 lakh for a ULIP, ₹5 lakh for other policies), so section 10(10D) does not exempt surrender or maturity proceeds. For a non-ULIP the gain is taxed at slab rate under section 56(2)(xiii); a contract classified as a ULIP is taxed as a capital gain under section 45(1B). The sum received on death is exempt whatever the premium. The rest is deferral: tax when money comes out, not every year, and no published CBDT position taxes the inside growth annually.
How is PPLI different from a ULIP?
A ULIP is a rupee retail product with the insurer’s own funds, a five-year lock-in and a ₹2.5 lakh annual premium ceiling for the maturity exemption. PPLI is a private contract from an insurer abroad, with a minimum premium set by each insurer, where the family’s own manager runs a separately managed account. For a resident, PPLI is subject to FEMA; a ULIP is not.
What is the RNOR window?
A returning NRI who was non-resident in nine of the previous ten years is usually resident but not ordinarily resident for two to three financial years. In that period income earned and received outside India is not taxed in India, and Schedule FA is not required. Withdrawals from a foreign policy that are needed within the horizon are best taken then, received abroad.
What is FAST-DS 2026?
A one-time disclosure window under the Finance Act 2026, open from 16 August to 31 December 2026, for foreign assets and income never reported in an ITR. For a foreign life policy bought with NRI earnings and simply not listed after return, the published cost is a fee of ₹1 lakh within a ₹5 crore ceiling, with immunity under the Black Money Act for what is declared.
Can I buy a policy through PPLI.com?
No. PPLI.com is a research publisher. It is not an insurer, an insurance intermediary or an investment adviser, is not registered with IRDAI or SEBI, and does not solicit, arrange or recommend insurance in India. Use the research with your own CA, lawyer and a licensed intermediary in the relevant jurisdiction.
Suitability check
Does a foreign life policy fit your family’s situation?
Five questions, a straight answer. Nothing is stored or sent; the answers stay in your browser. The result is not a review by your CA, but it tells you whether the conversation is worth having.
Who reads this
Written for Indian private wealth
NRIs and returning NRIs
Families in Dubai, Singapore, London and New York who build the structure while abroad and come home with the RNOR window in view.
Resident families with NRI members
Families who need to settle the assets, tax residence and succession of members living in different countries, and want the FEMA line drawn clearly.
CAs, private bankers and family offices
Advisers who want the section, the regulation and the tribunal order cited beside each statement, and the honest cases where the policy loses.
Sources and authorities
Read as at 1 November 2026. Each page of this edition carries its own source list; these are the instruments the edition rests on.
- FEMA 12(R)/2015-RB, Foreign Exchange Management (Insurance) Regulations, 2015; RBI Master Direction, Liberalised Remittance Scheme.
- Income-tax Act 1961, section 10(10D); sections 5, 6, 56(2)(xiii), 206C(1G); Schedule FA; Income-tax Act 2025.
- Memorandum to the Finance Bill 2025; Finance Act 2026 and the FAST-DS Rules 2026 (G.S.R. 732E of 14 August 2026) via KPMG (secondary).
- Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; CBDT Guidance Note on FATCA and CRS; IFSCA (Registration of Insurance Business) Regulations 2021; IRDAI policyholder portal on ULIPs.
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About a rule, a figure or a source in this edition. We answer research questions in general terms; we do not review personal circumstances, recommend products or arrange policies.
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Checked against Indian primary sources: the Income Tax Department, the RBI’s FEMA notifications and Master Directions, the Finance Bill memoranda, IFSCA and the tribunal orders named on each page. Where a statement rests on a law-firm, Big Four or press summary, the text says so.
Last updated: 1 November 2026
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