Budget nixing I-T exemptions won’t impact sales, says LIC chief

The Budget’s new income-tax regime that offers a lower rate in lieu of exemptions will not impact it, LIC has said.

Asserting that the insurer is going strong in policy sales and market share, M R Kumar, Chairman, Life Insurance Corporation of India, said: “We don’t think anyone is investing in LIC policies only for tax. At LIC, we also don’t focus on it. I don’t think the Budget proposal will impact insurance sales.” He was interacting with industry representatives here on Friday.

Impact of DDT

The Union Budget 2020-21 has proposed doing away with all tax exemptions and deductions for those opting for the lower personal I-T rates. Accordingly, tax-payers opting for the lower slab will no longer have the benefit of claiming deduction of up to ₹1.5 lakh under Section 80C for life insurance premium and Section 80D for health insurance premium payments.

Kumar also said it is too early to assess the impact of the Budget proposal to remove the Dividend Distribution Tax. The tax proposal is being considered as a dampener for domestic insurers and asset managers.

Highlighting the robust growth figures of LIC in the current fiscal, Kumar said it has crossed ₹1.5-lakh crore in ‘new business premium’. “This is the first time in its history, and LIC maintains the leadership position in the sector,” he said.

Individual new business performance of LIC as of January 31 grew 17.48 per cent to ₹45,199 crore in terms of first-year premium. The number of policies also grew 29.42 per cent to 1,95,85,635 by end of January.

Market share

The composite market share of the insurer in terms of number of policies sold increased to 77.61 per cent as of January 31, 2020 from 73.54 per cent a year ago.

Its composite market share in first-year premium also shot up to 70.02 per cent by end-January from 66.26 per cent a year ago.

Similarly, LIC’s pension and group schemes vertical created a new record by clocking more than ₹1-lakh crore in new premium income during the current financial year.

“To comply with the new IRDAI regulations, LIC has modified the existing products with features such as revised surrender value and extension of revival period from two to five years.

“Further, more benefits in the form of riders and option to take claim payments in instalments (settlement option) are added to most of the products,” it said in a release, adding that these modified products are being sold from this month.

The LIC Chairman also predicted a hike in the premium for term cover due to reinsurance stress.

“It is likely that term cover rates will go up,” he said, adding that for now, LIC has brought down its rates substantially in response to the common perception that its rates (for term cover) are very high.

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