A separate limit for life insurance premium under under Sec 80 C will drive growth, according to Manoj Kumar Jain, Managing Director, Shriram Life Insurance Company.

When approached by the Business Line on the suggestions recommendations for the Union Budget 2018-19, Manoj Kumar Jain lists out his views as below.

1. Separate limit for life insurance premium under Sec 80 C: In the current provisions, there is a limit of ?1,50,000 under Sec 80 C, 80CCC and 80 CCD. There is a separate section created under Sec 80CCD (1B), which provides a separate limit of ?50,000 for retirement savings under National Pension Scheme.

In the current Sec 80 C provision, other expenses/investments are clubbed along with life insurance premium. Tuition Fees, Home Loan Principal repayments, PF contribution and so on are also included and they completely edge out Life Insurance premium in the reckoning of 80C.

Our suggestion is to consider a separate sub section within Sec 80 C towards life insurance premium and any life insurance premium upto ?1 lakh needs to be considered. This limit has to work as a separate sub-limit within the overall limit of the Sec 80 C.

2. Group Insurance: Group Term life insurance cover product, 18 per cent GST is being charged on the premium. In group term life insurance, cover is offered to loan borrowers as a collateral and in the event of the death of the borrower during the term of the loan, Sum Assured provided under the Group life insurance cover product is paid to the Bank/NBFC, the loan is closed. This helps the family of the borrower from the harrowing experience of looking at ways and means to repay the loan, in the absence of the borrower. GST rate of 18 per cent also increases the cost to the borrowers.

3. Individual plan pure term insurance plan - GST waiver or reduction — upto ?10 lakhs sum assured: We have the urban educated masses opting for pure term life insurance either directly through the life insurers or through web aggregators. Education, access to information and web help the urban market class to enjoy the benefits of pure term plan. In most of these cases the Sum Assured starts from ?10 lakhs onwards

On the other hand, we also have significant number of SME enterprise owners: truck drivers, cab operators who actually need the life insurance, but do not have access to information and technology. For them the increase in cost of insurance by 18 per cent due to GST is large enough to deter them from taking pure term life insurance cover.

In order to serve this needy segment we propose full exemption from GST or reduction in GST to 5 per cent on pure term insurance plan upto a sum assured of ?10 lakh. This will help life insurance companies to focus on this segment and low GST can be a speaking point to the industry forums to which the customer segment belongs to.

With ?10 lakh sum assured, the family of the bread winner, will at least be able to meek out a simple living