Budget 2016: Insurers seek tax sops for term, home insurance in Union Budget

Say that products with long term tenure of over 10 years must be given more breaks than current limit of Rs 1.5 lakh

Insurance companies are seeking additional tax benefits for those investing in life insurance products for a longer tenure, apart from making special provisions for home insurance in the upcoming Union Budget.

Rajesh Sud, MD & CEO of Max Life Insurance said that life insurance products that are long term with tenure of 10 years and above should be given tax exemption over and above the current limits of Rs 1.5 lakh. He added that financial savings should be encouraged by giving more money in the hands of people.

Low penetration of insurance has been a concern in the country. With tax incentives, insurers believe more number of individuals will be motivated to buy an insurance policy.

With the insurance regulator also pushing for more protection or pure term products, insurers have also sought a separate exemption limit for term insurance.

Earlier, life insurers had also sought that the government should make term insurance mandatory. However, no such decision was taken.

Amitabh Chaudhry, MD & CEO, HDFC Life said that even with Goods and Services Tax (GST), it should be ensured that insurance services are not taxed higher so that policyholders are not burdened.

To make insurance more accessible, the government launched Pradhan Mantri Jan Suraksha Yojana, which included a life cover and a personal accident cover apart from a pension scheme.

The general insurance industry on the other hand is seeking some tax sops for specific products. G Srinivasan, chairman and managing director of New India Assurance said that tax exemption or incentives should be given for home insurance.

While the industry is also seeking some compulsory home insurance covers that would have to be taken by home buyers for their house and contents, they have asked the government to carve out a separate limit for this category.