The Union Budget for 20-21 has proposed a new tax slab where no concessions for deductions will be available to taxpayers. In Fact the Insurance Industry was seeking an increase in limit of deduction under section 80C exclusively for life insurance upto 1,50,000 or more. However the introduction of new tax slabs without deductions are indications that in future the government might be thinking of promoting tax regime without deduction.
The Life Insurance Industry is very much dependent on the deductions under 80C. A Large number of Population still purchase the cover for income tax deduction rather than life cover. This mindset needs to change and the Life insurance companies must start preparing for a deduction free regime.
Another major announcement was selling a part of stake of LlC through initial public offering. There were a lot of rumors in public that LIC was being disinvested. But the government has clarified that they have planned to dilute the stake. LIC will have the Sovereign Guarantee of the Central Government.
The government has proposed to hike the bank deposit insurance cover to Rs 5 lakh from the current Rs 1 lakh, to protect depositors in the event of a lender’s collapse. Though still this limit is low and must be increased substantially.
IRDAI is cracking down on the insurers for paying higher commission than the established norms of IRDAI under Insurance Act.
This year may witness the launch of tailor-made policies under the sandbox scheme. In health insurance there may be disease wise coverage, reimbursement of OPD expenses, App monitored wellness programme, and in motor insurance cover based on kilometers utilized by the insured, premium linked to drivers rating, motor floater policy etc.
