Online financial consultancy portal PolicyBazaar has suggested that the Finance Ministry give separate tax relief to those buying pure life insurance cover or term insurance.

In a letter dated December 15, PolicyBazaar has suggested the government introduce a separate tax deduction of ₹20,000 for pure life insurance cover beyond the existing Section 80C deduction of ₹1.5 lakh.

PolicyBazaar made the recommendations on the basis of a letter from the Finance Ministry asking all insurance companies to send in insurance sector-related suggestions for the upcoming Budget 2018-19.

Yashish Dahiya, Founder and CEO of PolicyBazaar, told BusinessLine that the government should give tax benefits to people who want to invest in pure life insurance.

“It is one of the best things to do. It will also create a favourable environment for pure life insurance... Only 8 per cent of the people in India are covered by insurance, which includes health and other ULIPs.

“Health insurance has a slab. So, why not have a slab for term insurance,” Dahiya said, adding that more and more people will get insured for ₹1 crore cover by paying as low as ₹9,000 in their thirties, and tax benefit would further expand the market. Dahiya said that not even a per cent of what insurance companies sell would be pure life or term insurance and many of the people are not even aware of what kind of products they are buying.

“So let’s have a simple life insurance product,” he added.

While the largest insurance company of the country sells around one lakh pure life policies, which is not even a percentage of all the policies it sells in a year, Dahiya claims that PolicyBazaar, which has several insurance companies on its platform, sells about four lakh term policies a year.

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