Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.
Key Takeaways:
Existing tax benefits under Section 80C and Section 10(10D) remain unchanged.
ULIPs will now be taxed under capital gains instead of income from other sources.
Foreign Direct Investment (FDI) cap in the life insurance industry raised to 100%.
New tax exemptions announced for NRI policyholders via IFSC offices.
These changes are aimed at boosting foreign investment, product innovation, and affordability
Union Budget 2025 aimed at a balanced approach for the Indian economy. With a focus on economic expansion, it has taken steps to bring down the fiscal deficit and increase the expenditure for development. The life insurance sector received a few key updates regarding taxation. It also focused on foreign investments and policy exemptions for NRIs. If you are an investor looking for insight into the changes and approach for decision making, something is in store for you. Scroll to discover.
Get Life Cover Instantly
Enter OTP
An OTP has been sent to your mobile number
Didn’t receive OTP?
Application Status
Name
Date of Birth
Plan Name
Status
Unclaimed Amount of the Policyholder as on
Name of the policy holder
Policy Holder Name
Policy No.
Policy Number
Address of the Policyholder as per records
Address
Unclaimed Amount
Unclaimed Amount
Sorry ! No records Found
. Please use this ID for all future communications regarding this concern.
Request Registered
Thank You for submitting the response, will get back with you.
Changes in the Life Insurance Sector
Some of the key aspects presented and changed in Budget 2025 concerning life insurance include:
Existing Tax Benefits
The life insurance premiums will continue to be eligible for claim deductions under section 80C of the Income Tax Act. The upper limit will remain ₹ 1.5 lakhs. The tax exemptions, on meeting the terms and conditions, will remain so under Section 10(10D) of the Income Tax Act. Further, the old tax regime will offer better benefits and maximum deductions compared to the newer one.
Clarification and Changes in Taxation Rules
Clarity and transparency have been provided regarding ULIPs or Unit-Linked Insurance Plans. These plans are a combination of both life insurance and investment. The budget has stated that the taxable returns and withdrawals obtained via ULIPs will be taxed as capital gains under Section 112A of the Income Tax Act. It will be effective from April 1, 2026.
These ULIPs were previously taxed as “Income from Other Sources”. The taxable returns here refer to ULIPs with premium costing over ₹ 2.5 lakhs. Further, if the ULIPs are held for more than 12 months or a year, the taxation will be applicable at 12.5 percent under Long-Term Capital Gains (LTCG) tax.
Impact of Budget on Life Insurance Plan Takers
The switch from the taxation category “Income from Other Sources” to Capital Gains will lead to taxes being charged depending on the individual’s tax slab. Hence, the taxes may increase for the low-income groups but decrease for high-income groups.
Foreign Direct Investment (FDI) Cap Removal
The FDI cap life insurance will witness an increase from 74 percent to 100 percent. It will be applicable for companies investing the total premiums within India. Concerning its implication on the Life Insurance industry, it is expected to offer the following benefits:
Possibility of more foreign investments, thus leading to lower premiums for customers.
More capital inflow might enhance investment and hence improve:
Quality of customer service
Quantity and quality of products
Betterment of claim settlement timelines.
Did You Know?
The origins of modern insurance can be found in the London Fire of 1666. Due to the severity of the fires, insurance became essential rather than optional.
Source: Investopedia
Tax Exemptions for NRIs
The insurance policies issued by the intermediary office located in the International Financial Services Center (IFSC) will be tax-exempt under Section 10(10D) of the Income Tax Act. It holds true for ULIPs with premiums above ₹ 2.5 lakhs and for savings plans exceeding ₹ 5 lakhs. However, the total premium must be less than 10 percent of the sum assured by the plan.
The change may lead to increased participation of NRIs in Indian Life Insurance Plans, positively impacting the economy. It will be applicable from April 1, 2025.
Conclusion
Union Budget 2025 has brought clarity and improvements in the life insurance sector. The taxation revisions, FDI cap removal, and expansion in NRI tax exemption will have certain notable impacts. The shift will also be likely to bring in foreign investment, enhance the quality of products and services, and lower the premiums. Discover an interesting variety of Life Insurance Plans now with Canara HSBC Life Insurance.
Life Insurance - Top Selling Plans
We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.
Sum Insured: Sum insured is the maximum cap on the costs you are covered for in a year against any unfortunate event. It is applicable to non-life insurance policies like home and health insurance.
Sum Assured: Sum assured is the amount the life insurance company pays to the nominee if the insured event happens (death of insured). This term is used in life insurance policies.
Maturity Value: The amount of money paid out when a life insurance policy matures is known as its maturity value.
Risk Transfer: Risk transfer is a strategic method where a pure risk can be contractually shifted from one party to another as part of risk management and control.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
