The Insurance Regulatory and Development Authority of India (IRDAI) envisions ‘Insurance for all’ by 2047, aiming to ensure that every citizen has comprehensive life, health, and property insurance coverage. As the interim Union Budget approaches, expectations are high for strategic initiatives that will drive inclusive growth in the sector. The government is likely to introduce measures to incentivize individuals to acquire sufficient insurance coverage. Here’s a look at potential areas of focus:
Incentives for first-time health insurance buyers:
Proposal for tax exemptions under chapter VIA for first-time medical insurance buyers, possibly up to 200 percent of the premium paid. Phased reduction to the threshold under section 80D over 3-4 years.
Addressing outpatient treatments:
Incentivizing insurance companies to offer products covering outpatient treatments with a potential announcement of lower GST on such policies.
Special exemptions for young policyholders:
Introduction of a special exemption under Section VIA for individuals below 30 years old purchasing policies digitally.
Reduction in mortality protection gap:
Consideration of a threshold-based tax exemption for individuals below 30 who purchase term insurance and/or annuity products with a minimum cover threshold relative to annual taxable income.
Encouraging vehicle insurance compliance:
Incentivizing owners of uninsured vehicles with a one-time tax exemption for renewing their insurance policies.
Safeguarding homes against natural calamities:
Proposal for a separate deduction limit of up to Rs 25,000 for property insurance premiums.
Potential direction to Real Estate Regulatory Authority (RERA) to make home insurance compulsory for property buyers.
Integration of travel insurance with leave travel allowance (LTA):
Inclusion of premiums paid for travel insurance under the LTA exemption, encouraging more people to opt for travel coverage.
With these potential initiatives, the Union Budget 2024 aims to create a framework for a more inclusive and resilient insurance landscape in India, aligning with the ‘Insurance for All’ vision by 2047.