Budget 2019: Health insurers expect hike in health sector allocations from Nirmala Sitharaman

Budget 2019 is a few hours away and India Inc is busy placing its demands before Finance Minister Nirmala Sitharaman. Insurance companies expect that the Modi 2.0 Government would increase its overall allocation in the health sector. They are of the opinion that to encourage more and more customers to insure themselves for a longer period and that tax exemption should be available each year based on the number of years covered. 

Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance said, “In this budget, we are looking forward to the government increasing its overall earmark on the health sector. An important recommendation which is being voiced collectively by the industry is to remove GST or minimize GST slab for health insurance premiums paid. Currently, the GST of 18% implied on health insurance premium is very high from a customer’s point of view and with the removal of GST, customers will be charged much less and it will be a big driving factor for them to invest in health insurance. Further, to encourage more and more new customers to ensure themselves for a longer period, tax exemption should be available each year based on the number of years covered."

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Mehrotra said that alternatively, tax exemption can be multiplied by the number of years of coverage. The tax benefit is something that customers expect in any form of investment they make, including health insurance. These measures will surely help boost health insurance penetration in India as well as encourage a culture of preventive healthcare in India. For specialized health insurance companies, a period of carrying forward of business loss and depreciation should be extended to at least 12 years.

Vineet Arora, MD & CEO at Aegon Life said, " There is a need for providing further impetus to life insurance companies for enhancing the insurance penetration in the country and for the role that it plays in the socio-economic development of the nation. There are a number of expectations from the upcoming Union Budget 2019." 

He said that creating a separate tax exemption for term insurance - Currently, the maximum tax exemption via Section 80C of the Income Tax Act is Rs. 1.5L. The industry wants to encourage more people to buy term plans, which helps people insure their lives adequately at low premium costs. There should be a separate exemption limit for premiums paid towards term insurance.  

"Five per cent GST on pure protection instruments - Be it the term plan, health insurance, critical illness plans or riders like term rider and critical illness rider, these should be exempted from GST. A significant reduction in premium will go a long way in building a secure nation where every household will have the ability to overcome financial stress caused by unforeseen events of life. Increased support through various government-led programs - While the government has taken concrete steps to promote life insurance by introducing a bouquet of plans in the past few years, it is important to review them against the changing socio-economic dynamics of the country. Also suggested, to bring pension policies sold by life insurers at par with the National Pension Scheme to ensure a level playing field. Also, recommend tax-free annuities upon maturity of a pension fund or policy as returns on them are lesser than tax-free bonds," concluded Arora.