Will Budget 2025 Boost Insurance Access and Affordability?

The Union Budget 2025, set to be presented by Finance Minister Nirmala Sitharaman on February 1, holds great anticipation for the insurance sector, with a focus on “Insurance for All.”

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Industry experts are eagerly awaiting reforms to drive higher insurance penetration and financial inclusion in India.

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The insurance sector is pushing for increased tax deductions for life and health insurance premiums under sections 80C and 80D.

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Experts recommend raising the current ₹1.5 lakh cap for tax deductions and introducing separate limits for term insurance and pension policies.

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Calls for expanding health insurance premium exemptions, currently between ₹25,000 and ₹50,000, to further incentivize health coverage.

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The sector hopes for a reduction in the 18% GST on life and health insurance premiums to improve affordability for policyholders.

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Lowering GST and allowing Input Tax Credit (ITC) for the insurance sector would directly benefit policyholders by reducing costs.

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Experts suggest introducing mandatory basic term life insurance for all formal employees, ensuring financial security for dependents.

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Despite growth, India’s insurance penetration still lags global standards. The sector is hopeful that these reforms will help achieve the “Insurance for All” vision by 2047.

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The Union Budget 2025 could drive key reforms in tax benefits, GST reduction, and mandatory coverage, improving insurance access and financial inclusion in India.

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