"In the Budget 2023, certain proposals have been made for non-linked life insurance policies that will be sold after 1 Apr 2023 whereby it is proposed to tax income from insurance policies (other than ULIPs) having premium or aggregate of premium above Rs 5,00,000 in a year. Tax exemption of Section 10(10D) is proposed to continue for proceeds upon death. Policies sold until 31 Mar 2023 are outside the scope of this proposal and does not impact those policies in any way. "
Speaking on the specific proposal, Prashant Tripathy, CEO & MD of Max Life said that Max Life has a well-diversified product mix across products and customer segments, and our share of business from customers with the impacted non-unit linked policies with annual premium of above Rs 5,00,000 is approximately ~9% of Individual APE for 9M FY23 and was ~6% for FY22. We don't expect this sale to completely disappear as among many levers such as shifting to lower ticket size and alternative products, we are confident of retaining significant portion of the sale. You will recall in budget of 2021 a similar exemption was withdrawn for ULIPs with ticket size more than 2.5 lac and post which we did not see any material impact even on the share of high ticket ULIPs. Further the VNB impact will be marginally lower than sales impact as such high ticket size policies do operate at lower margins.
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