The life insurance premiums will not increase in the near future, said Atri Chakraborty, COO at IndiaFirst Life Insurance while talking to CNBC-TV18.com. An improving claims trend with the impact of COVID-19 declining and the consistent improvement in mortality experience will lead to stabilising risk premium rates and accordingly should result in stabilising life insurance premiums, Chakraborty said.
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The advent of COVID-19 in FY2019-20 and the resultant impact had led to poor mortality experience leading to increase in term insurance rates in the last 2 years.
"The improving trends now, however, gives us enough reason to believe that rates will not rise as of now," Chakraborty told CNBC-TV18.com.
This comes at a time when lot of debate is going on insurance policies' new taxation rule.
Budget 2023 proposed to take away the tax free advantage from savings insurance plans issued on or after April 1, 2023 whose annual premium is above Rs 5 lakh. The new proposal will, however, not impact taxation of unit-linked insurance plans (ULIPs), term insurance and old policies.
Simply put, if premium paid by an individual for a savings life policy is more than Rs 5 lakh than on maturity the income from policy will be taxed. The threshold of Rs 5 lakh will be applicable on first year premium and not first year + renewal.
Several industry experts have said that the proposal will have a detrimental impact on the insurance business.
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