To create a universal social security system for all Indians, especially the poor and the under-privileged, the Centre plans to introduce affordable schemes for accident insurance, life insurance and pension.

The Budget has proposed an increased tax deduction limit of up to ₹25,000 besides giving additional pension benefits and doubling limit under transport allowance.

Health insurance premiums up to ₹25,000 will be subject to tax deductions, from ₹15,000 earlier. For senior citizens, the limit has been increased to ₹30,000 from ₹20,000. For very senior citizens of 80 years or more, who are not covered by health insurance, the government said deduction of ₹30,000 will be made for treatment expenses. Deductions under expenditure towards specified diseases of serious nature are proposed to be enhanced by ₹20,000 to ₹80,000 for very senior citizens.

“The fifth pillar of my taxation proposals this year is extension of benefits to middle-class tax payers,” Jaitley said. And an additional deduction of ₹25,000 will be allowed for differently-abled persons.

Insurers are expecting a major boost from the two new affordable insurance schemes announced by the Finance Minister, encouraged by the success of Jan Dhan Yojana for banking.

While Suraksha Bima Yojana, an accident insurance scheme of ₹2 lakh sum assured, comes with a premium of merely ₹12 a year, another scheme Jeevan Jyoti Bima Yojana with a life insurance cover of ₹2 lakh comes with an annual premium of ₹330. This is the lowest premium available in the market.

Expanding cover

Bhargav Dasgupta, MD and CEO of ICICI Lombard General Insurance, said the thrust in the Budget to provide a social security cover will provide a major impetus in spreading insurance awareness.

He said while the premium for the Suraksha Bima Yojana is very cheap, the law of large numbers will apply and the company will study the terms and conditions of the scheme.

Somesh Chandra, Chief Operations Officer and Chief Quality Officer, Max Bupa, said increasing the tax deduction in health insurance premium from ₹15,000 to ₹25,000 and up to ₹30,000 for senior citizens will improve affordability and accessibility of health insurance.

There is a clear intention of pushing health insurance coverage by incentivising the tax-paying public to spend more on health insurance, said V. Jagannathan, Chairman-cum-Managing Director of Star Health and Allied Insurance.

Antony Jacob, CEO of Apollo Munich Health Insurance, said that employees covered under Employees State Insurance (ESI) now have an option of choosing either ESI or a Health Insurance product, recognised by the Insurance Regulatory Development Authority which is a progressive step for the industry.

Pension scheme

The government also plans to launch the Atal Pension Yojana, which will provide a defined pension, depending on the contribution.

Also, to encourage people to join this scheme, the Government will contribute 50 per cent of the beneficiaries’ premium limited to ₹1,000 each year, for five years, in the new accounts opened before December 31, 2015.

The additional ₹50,000 benefit given to pension products will help bring in more investments to financial savings, said Pankaj Razdan, MD and CEO of Birla Sunlife.

However, Anuj Gualti, MD and CEO, Religare Health Insurance, said the marginal increase in service tax to 14 per cent will certainly impact the consumer, with a larger impact being experienced by low-income consumers of healthcare schemes wherein there has been a long standing industry request for removing the service tax levy.

“The proposal to make the ordinance (related to FDI in insurance) into a law is also a positive move and we hope that the same is implemented quickly as it will help the insurance sector bring in additional capital of close to $3.5 billion,” said Tarun Chugh, MD and CEO, PNB MetLife insurance.

(With inputs from PTI)

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