Budget 2019-20 expectations from the insurance sector: Increase support through various government-led programs in Union Budget 2019 India
Budget 2019: Life insurance sector has played a major role in the development of the country. However, there is a need for providing further impetus to life insurance companies for enhancing the insurance penetration in the country for the role that it plays in the socio-economic development of the nation. There are a number of expectations from the upcoming Union Budget 2019. To begin with:
1. Creating a separate tax exemption for term insurance – Currently, the maximum tax exemption via Section 80C of the Income Tax Act is Rs. 1.5 lakh. The industry wants to encourage more people to buy term plans, which helps people insure their lives adequately at low premium costs. There should be a separate exemption limit for premiums paid towards term insurance.
2. 5 per cent GST on pure protection instruments – Be it the term plan, health insurance, critical illness plans or riders like term rider and critical illness rider, these should be exempted from GST. A significant reduction in premium will go a long way in building a secure nation where every household will have the ability to overcome financial stress caused by unforeseen events of life.
3. Increased support through various Government-led programs – The government has taken positive steps to promote life insurance, for instance by introducing a bouquet of plans in the past few years, however, it is also important to review them against the changing socio-economic dynamics of the country. It is also suggested, that the government brings in pension policies sold by life insurers at par with the National Pension Scheme to ensure a level playing field.
It is also recommended that tax-free annuities upon maturity of a policy or pension fund as returns on them are lesser than tax-free bonds.
By, Vineet Arora, CEO, Aegon Life Insurance