The outlook for the Indian life insurance industry looks promising with growth projections of 12-15% CAGR for the next five years. There also lies a significant opportunity to improve insurance penetration from its current level of 3.4%*. The growth potential for this sector continues to ride on several factors, including country’s favorable demographics, increased consumer awareness, a supportive government focused on business-friendly policies and the insurance regulator promoting customer-centric products and practices.
In India, life insurance acts as a social security measure. According to industry reports, the current life cover in India does not address even 10%** of the total protection requirement in the country. An additional exemption under Section 80C will encourage people to buy adequate life insurance to protect their family’s financial future, while getting a tax benefit.
We are delighted to see that the GST Council has made significant headway towards resolving the tax administration issues. We look forward to more clarity emerging on the same along with a favorable view on lower tax rates for an essential service like life insurance.
In addition to the above, we would request the Government to consider a revision of Section 10(10D). Currently, to avail tax benefits, the yearly premium for the life insurance policy cannot exceed 10% of the sum assured or life cover. This makes it difficult for individuals in a higher age bracket and customers of single premium policies to avail tax benefits while protecting their families. We would request the Government to relook at this limit and increase it to 20% as was the case earlier (upto March 2012).
The life insurance sector plays a pivotal role in driving economic growth, financial protection, job opportunities and development of infrastructure in the country. The above recommendations would enable the sector to contribute more effectively in the above.
**Swiss Re Study 2015
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