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Your insurance will turn costlier, thanks to Budget.
Apart from the service tax hike, increase in premium to sum-assured ratio to 10 times from the existing five times will make life insurance costlier to all including senior citizens, Mr V. Srinivasan, Chief Financial Officer, Bharti AXA Life Insurance, told Business Line .
According to Mr Rajesh Sud, CEO and Managing Director, Max New York Life Insurance, service tax in products with explicit mortality charges will increase from 10 per cent to 12 per cent of the mortality charges.
In others, service tax on first year premium would increase from 1.5 per cent to three per cent of the gross premium.
“This will result in having different amounts for the first year premium and renewal premium in participating and annuity products, thus resulting in administrative challenges,” he said.
The general insurers, however, see a mixed impact of the Budget.
“Restoration of Cenvat credit on motor insurance is good news. It will reduce our cost on claims by 12 per cent,” said Dr Amarnath Ananthanarayanan, MD and CEO, Bharti AXA General Insurance.
This addressed the anomaly that crept into motor insurance last year, said Mr Bhargav Dasgupta, MD and CEO, ICICI Lombard GIC.
“On the negative front, the increase of the service tax rate will raise the cost of insurance further for the consumer,'' he added.
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