Living abroad far away from home as a Non-Resident Indian (NRI) in the UK, your family back home in India is the closest thing to your heart. As you want to secure their future financially, purchasing a financial protection plan from Indian insurers is a wise decision.
While searching online for term insurance for NRIs in the UK, you might have wondered how Indian insurance plans provide maximum life coverage at comparatively cheaper rates than UK insurers. But while filling out the application forms online, you may have stumbled upon a FATCA Declaration form.
Don’t worry; here is a simple guide for you to understand what this declaration form is all about and how this document helps you to purchase a life insurance policy smoothly.
What is a Term Insurance Plan?
A term insurance plan is the basic life insurance coverage where you pay a certain amount of money (premiums) to the insurance provider on a yearly basis. In return, the insurance company pays a big chunk of money (sum assured) to your nominees in case of unfortunate death during the policy tenure.
For an NRI living in the UK, a term insurance policy bought from India secures the future of your parents, spouse, or children back home in India, financially.
What is a FATCA Declaration?
FATCA stands for Foreign Account Tax Compliance Act. This is a worldwide tax compliance law that tax authorities like the Income Tax Department of India enforce on financial institutions like insurance companies.
When you buy financial products from India, Indian tax authorities ask you to fill out a simple FATCA Declaration Form that asks you to declare the following:
- – Your Full Name and UK Residential Address
- – Your country of tax residence and
- – Your UK Tax Identification Number
By filling out this self-declaration form, you simply inform the Indian Insurance Company about your tax compliance in your country of residence (the UK).
Do UK-based NRIs need to fill out this form?
You may ask, “Why do I need to fill a tax form if FATCA was made by the American government for Americans?”
Well, India has mutual tax treaties with several countries, including the UK, to exchange tax information (commonly known as the Common Reporting Standard or CRS) on financial assets. Thus, in order to remain compliant with the Indian tax laws, the Indian life insurance companies require all NRIs purchasing a life insurance policy from them, including those based in the UK, to fill out this simple FATCA Declaration Form.
Why should an NRI buy a term insurance plan from India?
Purchasing a term life insurance policy from India offers a plethora of benefits for NRIs residing in the UK wanting to secure the financial future of their loved ones back home.
Some key benefits are the following:
- Lower Premiums: Life insurance plans purchased from India offer comparatively lower premiums to cover big amounts of sum assured (e.g., 1 crore or more).
- Quick & Hassle-Free Online Process: You can fill up the application form online from the comfort of your home in London, have a video conference for a medical examination, and even upload your documents online electronically.
- Payment in Local Currency: You can pay your insurance premiums from your NRE or NRO account in India directly into the Indian – Insurance Company’s account.
- Financial Security for Family in India: The insurance proceeds paid by the insurance company will land directly into your nominee’s bank account in India without any hassles in case of unfortunate death.
How do I fill out my declaration form?
The process to fill the tax declaration form is simple. Here is how to go about it:
- Keep Your Documents Ready: You will need your UK address proof (like a utility bill or bank statement), your Indian passport, and your UK National Insurance (NI) number.
- Tick your Tax Residence: Mark “United Kingdom” as your country of tax residence.
- Provide Your Tax ID: Enter your UK National Insurance Number in the space provided for “Tax Identification Number (TIN)”
- Sign and Submit: Check all your details carefully, sign the digital form, and submit it along with your term plan proposal.
Common Errors to Avoid
To make sure your insurance application gets approved smoothly, here are some common errors to avoid when filling out the declaration form:
- Always disclose your accurate worldwide tax information.
- Make sure the name you put matches the name on your passport
- Avoid Delays in Submission
Buying a financial protection plan for your family back home is undeniably one of the best things you can do for them.
Filing a FATCA Declaration when buying term insurance for NRIs in the UK is just a simple formality that takes just two minutes of your time to complete. This process helps you to keep your valued policy intact and let you enjoy total peace of mind!
