Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Reviewed By :
Prasad Pimple
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Published on : Mar 09, 2023
Key takeaways
According to the Union Budget proposal:
- An individual will be required to pay tax on the maturity amount of life insurance plans when the total yearly premium surpasses ₹5 lakh.
- Any life insurance policies with maturity proceeds issued after April 1, 2023, have an annual premium of more than ₹5 Lakh (apart from ULIPs) and henceforth be subject to taxation.
- Term insurance and ULIPs (unit-linked insurance policy) remained unaffected in the Union Budget 2023, and the policyholders can continue to enjoy the benefits of life insurance and investment opportunities.
The Union Budget is a crucial financial document released by the Indian government each year, outlining the government’s plans and expenses for the upcoming fiscal year.
The Union Budget 2023, recently presented by the Finance Minister, has several provisions that will impact the life insurance sector in India. In this article, we will see how the budget is expected to shape the future of life insurance in India, and what implications it may have for individuals looking to purchase life insurance policies.
Life Insurance And Budget Amendments
- According to the Union Budget proposal, an individual will be required to pay tax on the maturity amount of life insurance plans when the total yearly premium surpasses ₹5 lakh.
- According to the Budget plan, any life insurance policies with maturity proceeds issued after April 1, 2023, have an annual premium of more than ₹5 Lakh (apart from unit-linked insurance policies, or ULIPs) henceforth be subject to taxation.
- The annuity income received from a pension plan will be taxed at the marginal tax rate in accordance with the new tax regulations by the Union Budget on insurance.
Policies That Remain Unaffected
A few policies and sectors remained unchanged while others underwent significant change. Several of the same-old policies are as follows
- One of the policies that remain unaffected in the Union Budget insurance is the term insurance, which means that the policyholder can continue to avail of the policy’s benefits and the premium paid without any new updates or changes.
- ULIPs also remained unaffected in the Union Budget 2023, and the policyholders can continue to enjoy the benefits of life insurance and investment opportunities.
- ULIPs are investment-oriented insurance policies that offer both life insurance coverage and investment opportunities. The premium paid in ULIPs is invested in equity, debt, or a combination of both.
- The emphasis on Term and ULIP policies in the Union Budget on life insurance is significant as these policies have been gaining popularity in recent years.
- These policies are considered a cost-effective and efficient way to secure an individual’s financial future and family.
- Death benefit will not be taxable and will continue as it is now.
Conclusion
The Union Budget 2023 has proposed several changes to the policies related to insurance premiums and maturity amounts, as well as tax rules on these. The changes aim to increase tax savings for individuals and make it easier for them to receive a higher amount of maturity proceeds and death benefits. However, the new tax rules on annuity income received from a pension plan are expected to impact the total tax liability of individuals.
