Insurance was one of the key highlights of this year’s Union budget. From the insurance sector, the overall verdict is good as the announcements show government’s pro-activeness to bring in substantial growth. A practical budget that didn’t just go the populist path was a sensible approach taken by the government. Concrete steps were taken to instil confidence and awareness among people regarding insurance, thus giving a huge impetus to this sector.
The Concept of Social Security Umbrella:
Insurance penetration has been a perpetual problem. Numerous schemes like Suraksha Bima Yojana and Jeevan Jyoti Bima Yojana will definitely help broaden insurance base. Insurance and its benefits will reach to the uninsured sections of society. However, budgets are infamously known for announcing big schemes and then orphaning them midway. Implementation and execution plans for these schemes have to be watched carefully to assess target achievement in future.
The Exemption Approach to Incentivize:
The approach to incentivize by offering tax exemption is a great way to encourage people to shift their focus on health insurance. It is now that the significance of having a health insurance will see a surge. While on one hand people have incentive to buy higher premium health insurance plans, on the other hand it impresses upon that the government concurs to the rising cost of healthcare. The thought behind is important for the growth of health insurance. Tax exemption limit has been increased from Rs 15,000 to Rs 25,000 for health insurance. For senior citizens, this limit has been increased from Rs.20, 000 to Rs.30, 000.
Recognizing the Criticality of Insurance:
For any sector to grow it is important that the concerned parties (in this case government and buyer) recognize the criticality of its product. Our Finance Minister, Arun Jaitely, said; “A large portion of India’s population is without any insurance coverage–health, accident or life. Worrisomely our young population also ages and it is also going to be pension-less.” This is a huge step in recognizing the need of insurance and will surely boost the sector. Accident cover of Rs 2lakh for an annual premium of Rs.12 under Pradhan Mantri Suraksha Bima Yojana and Atal Bihari Pension Yojna wherein government will contribute 50% of contribution made by an individual are worth the applause.
An All-Inclusive Plan
It was interesting to see how budget brought differently-abled, senior citizens, very senior citizens (above 80 years) and parents of girl child into mainstream insurance. Tax deduction under Section 80D for senior citizens has been increased to Rs 30,000. Under Sections 80DDB, which allows a deduction of Rs 60,000 for treatment of specified diseases like cancer, AIDS, etc, the amount for senior citizens has now gone up to Rs 80,000. For very senior citizens of 80 years or more, who are not covered by health insurance, government said deduction of Rs 30,000 will be given for treatment expenses. Additional deduction of Rs 25,000 will be allowed for differently-abled people. Full tax exemption was provided under Sukanya Samriddhi Scheme for parents of girl child. Thus, this budget can be hailed as a positive one which is meant to be effective.
This budget touched upon accident, pension, health and life insurance. It is interesting to see that soon after the budget was announced, the insurance advertisements began making frequent rounds on TV. For sure, the budget had uplifted the mood of the insurance sector. Hopefully, the ordinance is also passed in the same spirit and IRDA cooperates to reckon with the initial enthusiasm build by this budget. Implementation is what matters the most at the end of the day.