Page 18 - The Insurance Times February 2026

Insurers seek higher income tax relief on premiums
Attention Subscribers
in Budget FY27 Please renew your Subscription of The
Following the removal of GST on insurance premiums, insurers are now Insurance Times Journal to receive
pressing for enhanced income tax relief for protection, health and pension copy of the journal uninterruptedly.
products in the Union Budget for FY27. Industry participants are seeking
You can now pay by GPAY, Phonepe,
higher deductions under both tax regimes and revisions to thresholds
Paytm, Amazon, ICICI Pay, BHIM UPI
governing taxation of maturity proceeds.
Insurers have proposed raising the premium limit for taxing maturity
proceeds of traditional life insurance policies from Rs. 5 lakh to Rs. 10 lakh.
They are also seeking an increase in the tax-free premium threshold for unit-
linked insurance plans (Ulips) to Rs. 5 lakh, bringing them in line with
traditional products. The existing Rs. 5 lakh cap on traditional policy
premiums was introduced in 2023.
Satishwar B, MD and CEO of Bandhan Life Insurance, said the GST waiver
has improved affordability and demand for life insurance. He added that
better tax incentives for protection and health plans could significantly
expand coverage and support the government's Insurance for All by 2047
objective. Insurers are also calling for stronger tax support for pension
products to encourage long-term retirement savings and improve financial
security.

government-backed insurance and allows insurers flexibility in setting
destabilise the sector. The report commissions, provided they remain
acknowledged LIC's concerns, within prescribed aggregate
highlighting the sensitivity of any thresholds. However, elevated
structural changes involving the state- distributor payouts have pushed up
owned insurer. acquisition costs, increasing premium
burdens on customers and drawing
Life Council panel suggests regulatory scrutiny. Sashi Publications Easy Payment
capping or staggering The panel has suggested linking Modes :-
commission payments more closely to i) UPI ID: SASHIBOOKS@KOTAK
distributor commissions premium collections or deferring ii) GPAY: 9830171022@okbizaxis
A committee constituted by the Life payouts over the policy life to align iii) PAYTM: 9830171022@paytm
Insurance Council has recommended distributor incentives with long-term iv) NEFT: Current A/C
capping distributor commissions or policy persistency. An industry source 402120110000327 of 'SASHI
staggering payouts over time to reduce said staggered commissions or caps PUBLICATIONS PRIVATE
acquisition costs in the life insurance could be introduced as early as April to LIMITED, Bank of India, VVK
sector. The proposals are expected to address cost pressures. Road Branch., Kolkata, India,
be submitted to the Insurance
The Reserve Bank of India has also IFSC Code : BKID0004021
Regulatory and Development Authority
flagged high acquisition costs as a v) Credit Card:
of India for consideration.
systemic concern in its Financial www.sashipublications.com
Currently, life insurers operate under Stability Report, warning that For any query please call
overall expense of management (EoM) persistent expense-heavy structures 9073791022/9883398055
limits rather than product-specific could hinder insurance penetration and
www.sashipublications.com
commission caps. This framework affordability over the long term. T

16 February 2026 The Insurance Times