Despite millions of efforts, people have much less access to insurance in the country. After the commencement of Korona’s epidemic, people have understood the benefits of insurance. Sale of life insurance and Mediclaim Policy has increased. But, this is insufficient. Finance Minister Nirmala Sitharaman (Budget 2022) can make a big announcement to increase people’s access to insurance products. The insurance industry also has many expectations from the Finance Minister. Let us know about them in detail.
Currently, the premium of the insurance policy costs 18 percent GST. Due to this, the premium increases significantly. This can be reduced to 5 percent. This will reduce the premium of insurance policy. The government needs to reduce GST to 5 % on insurance products for at least 5 years. The insurance industry has told Finance Minister Nirmala Sitharaman about its demand.
Insurance companies believe that the government should take concrete steps to increase the reach of people to the insurance policy. For this, there is a need to increase the investment limit under Section 80C of the Income Tax Act, 1961. Right now its limit is Rs 1.5 lakh. This can be increased from 2 to 2.5 lakhs. The second option is to make the insurance policy out of the 80C radius and make a separate bracket for this. This will help in increasing the reach of insurance products to the people.
In view of the increase in medical experience, there is also a need to increase the tax exemption limit on the health policy. Currently, a person under the age of 60 can claim deduction of Rs 25,000 annually by purchasing a Mediclaim policy for his family. He gets a deduction of up to Rs 50,000 annually on purchasing a policy for elderly parents. This deduction is found under section 80D of Income Tax. It needs to be increased, because more medical cover is necessary than people’s lives are long.
In the financial year 2020-21, only 4.2 percent of people had access to insurance in the country. Life insurance had access to 3.2 percent and non-life insurance was 1 percent. Therefore, the government needs to take concrete steps to increase the access insurance products of the people. Finance Minister Nirmala Sitharaman can announce this in the budget.
