The budget must benefit policyholders
17 February 2006
Metlife MD Venkatesh Mysore suggests how the forthcoming union budget can make it more attractive for the policyholders to insurance themselves, considering only two per cent of Indians have any insurance.
The insurance sector in India has come a full circle from being an opencompetitive market till the '50s to being nationalised for decades, before reforms around the turn of the millennium brought the sector back to a liberalised market again. Now just five years old, the fledgling private insurance industry now faces the challenges of deregulation, consolidation and convergence of financial services.
Every industry has a wish list it presents to the finance minister while the annual budget is under consideration. The life insurance industry is no exception. Here is a list of recommendations that will benefit not just the insurers but policyholders as well.
Amendments to the Income Tax Act
The present section 80ccc limits the deduction towards contribution to pension schemes of a life insurance company to Rs10,000. The deduction has also been clubbed to an overall limit of Rs1,00,000 for section 80c, section 80ccc and section 80ccd put together. The downside is that the deduction under section 80ccc can be 'nil' in case the entire amount of deduction of Rs.1,00,000 has already been exhausted by specified rebates available under Section 80c.