Sales of life and health insurance policies, which qualify for income tax exemptions, are expected to have great success due to the new simplified income tax regime announced in the Union Budget. Tax savings, which was the biggest driver of life insurance , has lost relevance for many, as it allows taxpayers to pay taxes at a much lower rate if they waive the exemptions.
“Most middle-class taxpayers will see this as -- lower tax slab, less paperwork. These will become the key motivations. Very few people take life insurance purely for protection - most view it as a savings or investment instrument. Now with that clear incentive gone, there will be a dip,” said a CGM from LIC.
Insurers consider this an important setback because insurance penetration in India is low compared to other countries. Shares of insurance companies fell after the announcement of the budget.
Every March 31, it was common for staff members to work late at night in LIC offices throughout India. Insurance agents would rush to pressure LIC officers to take their last-minute proposals, as thousands of Indians tried to request tax exemptions just before the deadline. But this could change this year, sources said.
Live plus IRDAI officials said they were completely baffled by the Union finance Minister's budget announcement. “Certainly we were not asked about this. And it will have a negative impact on the sector, ”said an IRDAI member. “But it's still early. But I have hopes since the FM had a press conference after the announcement of the budget, and there it mentioned the aspect of saving. ”
“Life insurance and health insurance will take a massive hit. Now that the tax benefit has become optional. While we will retain our older clientele, youngsters might decide to trade in financial security for plus cash in hand,” said the LIC CGM.
Insurers say that insurance was always a product of momentum and now that the key incentive imposed was eliminated, not many could think of financial protection and fiscal prudence. “In India, construction has always boosted savings and future risk management by encouraging conscious investment towards them with the help of tax relief. We haven't seen ads that promote risk management practices, ”said RM Vishakha, MD and CEO of IndiaFirst Life Insurance.
Las instituciones también dicen que los mayores ingresos por gastos no deberían haber tenido el costo de los ahorros. “La opción para las personas de optar por una estructura de losa tributaria plus baja sin deducciones o para continuar con las losas plus altas anteriores con deducciones para EMI de préstamos hipotecarios, inversiones en seguros, etc. parece un poco confusa. En un país como India con una población joven con poca seguridad social, es imperativo incentivar a la joven India a ahorrar para el futuro y también a tener una casa ”, dijo el director gerente de Emkay.