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The Finance Minister P. Chidambaram has announced a package for the life insurance sector. These measures are intended to benefit the companies as well as the policy holder. Here are the highlights:
General issues:
IRDA to consider ‘Use and File’ system for introduction of simple and easily understood products. Life insurance companies, subject to some conditions, can introduce a product even without getting formal approval from the IRDA.
IRDA to consider 30-day norm for clearance of products
IRDA will evolve, notify guidelines in order to reduce the arbitrage between ‘units’ and ‘traditional products’
Bank can become brokers for offering bouquet of life insurance products
All banking correspondents may be allowed to sell micro insurance products
An insurance company may appoint ‘mentors’ for mentoring agents
Relaxation in investment norms for life insurance companies is under consideration
The investment in infrastructure SPVs floated by any company and not just by PSEs will be allowed
Taxation Issues:
Reduction in service tax on first year regular premium as well as single-premium policies
Treating the annuity policy at par with NPS
Exempt premium for social security insurance schemes from service tax
New avenue for Income-Tax exemption. Department of Revenue to consider allowing some insurance pension products to be included in separate limit over and above Rs 1 lakh under Section 80(C) of the Income Tax Act
For agents, TDS on cumulative commission payment exceeding certain threshold, say Rs 50,000
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