Now, dollar-denominated insurance policies for overseas-bound students, parents saving for children’s foreign studies

Rahul Prasad, CEO, HDFC Life International

After setting up operations at the International Financial Services Centre (IFSC), GIFT City, Gandhinagar, in August 2023, HDFC Life International has rolled out two products: US Dollar Global Education Plan (a unit-linked insurance scheme or ULIP) and Global Student Health Care policy. The ULIP is targeted at parents who wish to create an education corpus in dollars for their children’s foreign studies and the health insurance policy is meant to take care of their overseas-bound children’s medical expenses in the event they need treatment when out of the country.

The GIFT City branch will cater to non-resident Indians (NRIs) and well-travelled resident Indians with investments overseas and desire to send their kids abroad to pursue higher studies, HDFC Life International and Reinsurance CEO Rahul Prasad tells Preeti Kulkarni. Edited excerpts from the interview:

Your primary target groups are NRIs and resident Indians with global aspirations. Could you elaborate on what are the advantages, from their perspective, of buying insurance policies from HDFC International Life rather than domestic insurers?

The segment we are very excited about is what we internally refer to as global Indians. This comprises both non-resident Indians and resident Indians with investments abroad or those who plan to send their children overseas to pursue higher studies. This segment will grow significantly over the next five to seven years.

There is a growing trend of resident Indians seeking education overseas, going abroad on work assignments, investing and buying properties overseas. There are resident Indians who do business outside the country. This apart, many Indians travel the world and stay extensively outside India.

People are saving in different currencies, they seek diversification, they want continuity outside India and so on. These are areas where you require a completely different set of solutions on top of what you can already access (via domestic insurers).

Through us, they get an opportunity to access dollar-denominated products (for currency risk mitigation), while their rupee-related requirements can be taken care of by India-based entities. We cater to their insurance needs on the life, health and travel side which are more international in nature.

Also read: How investing in mutual funds for overseas education can help

What is the size of this market segment?

The ‘global Indians’ segment represents a substantial growth opportunity. According to recent remittance data, India remains one of the largest recipients of inward remittances ($125 billion in 2023) globally. Outward remittances under LRS (the Liberalised Remittance Scheme) have been increasing, reaching nearly $32 billion in FY24, with significant amounts directed towards education, maintenance of close relatives, and property purchases abroad.

Solutions such as long-term savings, life insurance, education planning and retirement planning in US dollars are becoming increasingly critical for this segment, which we view as a significant growth opportunity.

What is the rationale behind your GIFT City presence? What are the opportunities you gain access to through this branch?

HDFC Life International at GIFT City is a branch of HDFC International Life and Reinsurance, which is a 100 percent subsidiary of HDFC Life Insurance, based at DIFC (Dubai International Financial Centre). We set up operations at GIFT City in August 2023 to provide life, health and travel insurance solutions. So, that's the structure.

Your regulator is not the Insurance Regulatory and Development Authority of India (IRDAI) but the International Financial Services Centres Authority (IFSCA, the regulatory body that oversees the GIFT City special economic zone). Is the difference in regulations the reason you can offer both life and health insurance products?

We are a branch of HDFC Life International and Re, DIFC. What the IFSCA says is that a branch is allowed to undertake all those businesses that the parent, the head office or the main entity is allowed to undertake. We are established in Dubai and are regulated by the Dubai Financial Services Authority (DFSA). Our licence encompasses life and health insurance businesses. We are able to do both because the Dubai entity is allowed to do both.

Also read: Why overseas student travel insurance policies are a must

Could you elaborate on the products you currently offer and those you plan to roll out?

Some products have already been launched and some are in the pipeline. We want to offer a complete suite of products ranging from term insurance and long-term savings products to health insurance policies and retirement plans. So we have launched a long-term savings product—US Dollar Global Education Plan—which is meant for parents who wish to create an education corpus in US dollars for their children. It allows them to build a corpus in the same currency in which the education fees will have to be paid, thereby negating any currency risk. Then, we came out with a health insurance product meant for students who are going abroad, as we felt that there is a need for a comprehensive health cover wherever they may be. The sums insured can range from $500,000 to $3 million. Next, we will come up with products on the retirement and term insurance side.

What is the minimum ticket size for these insurance policies? Also, could you talk about the taxation aspect—for instance, how will the maturity proceeds of, say, your ULIP be taxed?

Minimum ticket sizes are fairly low—these are not products meant only for the affluent. People can invest (pay premium under the company’s ULIP) as little as $200. On the taxation side, the rules are no different. We are based in GIFT City, but the same taxation rules (as with domestic insurers’ policies) will apply.

One challenge with respect to overseas student travel and medical insurance policies that domestic insurers face is overseas universities’ insistence on students buying health covers from local insurers. How do you plan to tackle this?

There are some universities, some places in the US, that have mandates in terms of what (kind of insurance) the student should take. However, many also provide ‘waiver’ options. They also allow students to buy their own insurance policies, provided they meet the requirements listed by the university management. In a lot of countries, in fact, there are no such strict requirements. We are obviously trying to figure this out. We are encouraging people (parents/students) to study the requirements and see whether they need our plans as primary, secondary or top-up covers. For instance, local insurers’ policies may be limited to only that particular location. So we feel there is scope for products like ours due to the extensive nature of benefits that we offer.

What are your expansion plans? What is your distribution strategy going to be?

We will have tie-ups across segments—banks, brokers, our own online channels and, of course, in locations where international brokers are allowed to deal with what they call as foreign currency.