High-value insurance policies in the slow lane after tax overhaul

Non-linked products are insurance plans not linked to the stock market, and therefore, their returns are not based on market performance

High-value insurance policies experienced muted growth in the first six months of the current financial year after the Centre decided to tax such products in this year’s Budget. Simultaneously, there has been a marked improvement in the growth of policies with premiums of ‘less than Rs 5 lakh’, mainly originating from smaller cities.

During this year’s Budget, Finance Minister Nirmala Sitharaman proposed that insurance policies (excluding unit linked insurance plans or ULIPs) with an aggregate premium exceeding Rs 5 lakh, and the maturity amount, would not be exempt from tax. This rule came into effect on April 1, 2023.

Speaking