HNIs’ Jumbo Life Covers Overseas Under Lens

Jumbo life covers running into hundreds of crores, bought by rich Indians from offshore insurers have drawn the attention of authorities.

Around 25ultra- high net worth individuals across the country have received notices from Enforcement Directorate (ED) for violating foreign exchange regulations which prohibit residents from purchasing life insurance policies from overseas companies without prior permission from regulators, according to three persons aware of the transactions.

Unbeknownst to most outside the secretive world of wealth management, such covers, sold at substantially lower premium than the rates charged by domestic insures, are often structured as single-premium ‘life insurance wrapper’.

The regulatory red line is crossed when a jumbo policy is bought by transferring funds under the Reserve Bank of India’s liberalized remittance scheme (LRS).  S-ET

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