Life insurance companies have urged the regulator to work out a special investment window for their products.
The issue was raised at a recent meeting of the Life Insurance Council with Subhash Chandra Khuntia, Chairman, Insurance Regulatory and Development Authority of India.
“Life insurance products have a long investment period and need focussed attention. They should not be clubbed with other investments under the Section 80 C Income Tax limit,” said an official, who attended the meeting, adding that life insurers have sought a separate annual investment window of at least Rs.50,000.
Sources said that Khuntia has asked the life insurance industry to finalise a formal proposal that can be taken to the Finance Ministry for further discussion.
The government offers an additional tax deduction of Rs.50,000 for investment in the National Pension System, and insurers say that a similar facility should also be extended to life insurance products.
Life insurers have also pointed out that unlike general insurance products such as third-party motor insurance, which is mandatory, most life insurance products do not have a sufficient “pull factor” and fail to attract the interest of consumers.
“Life insurance products are, however, important investments and have a huge potential given the large under-penetration of these products in the country,” said the executive.