Life insurers see little impact from tax sop removal

LIC and other life insurers expect the impact of recent tax changes on high-value, non-participating policies to be minimal. LIC said on an investor call that only 0.04% of policies sold in FY23 had premiums exceeding 5 lakh.

The finance minister announced in the February budget the scrapping of the tax exemption on maturity proceeds of non-unit linked insurance plan (ULIP) policies purchased after April 1 with annual premiums above 5 lakh. That had led to a rise in pre-booking of high-ticket, non-linked policies in March.

LIC said the number of policies above the threshold is 0.04% of the total policies and 3.5% in terms of value.