Budget FY27: Boost to retirement savings, higher tax exemptions for protection plans top insurer’s wish list

Insurance sector stakeholders have identified key priorities for the upcoming Union Budget, including incentives to boost retirement savings and an increase in the premium cap for tax-free maturity of Unit Linked Insurance Products (ULIPs).

B Satishwar, MD & CEO of Bandhan Life, emphasized the urgency of addressing India’s projected $85 trillion retirement savings gap by 2050. He proposed expanding the ₹50,000 tax deduction to encompass all pension and annuity products while advocating for reduced taxation on annuity payouts to enhance retirement income efficiency.

Satishwar further suggested aligning the ₹2.5 lakh annual ULIP premium threshold—currently lower than traditional insurance products—with a raised ₹5 lakh cap. This adjustment would simplify tax benefit comprehension across insurance categories.

Tarun Chugh, MD & CEO of Bajaj Life Insurance, urged the Budget to prioritize healthcare affordability through increased public health expenditure. He recommended introducing separate tax allowances for outpatient (OPD) services and preventive health screenings beyond existing Section 80D limits to promote proactive healthcare adoption.

Catalyst for change

Sharad Mathur, MD and CEO of Universal Sompo General Insurance, underscored the need for a time-bound roadmap to achieve broad insurance coverage by 2047. He highlighted the necessity of shared digital infrastructure, interoperable platforms, and cost-effective distribution systems to expand access—particularly for first-time buyers.

Mathur proposed sustained government funding for insurance literacy initiatives targeting rural and underserved demographics. He additionally called for collaborative frameworks enabling private insurer participation in state-led welfare schemes.

While GST exemptions on retail health and life insurance premiums have improved affordability, Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI), stressed the need to address structural costs. He advocated for public-private partnerships to strengthen risk-pooling mechanisms for health, MSME, climate, and catastrophe-related exposures.

Srikanth Kandikonda, CFO of ManipalCigna Health Insurance, warned that despite recent reforms like 100% FDI in insurance, medical inflation—projected at 11.5–14%—continues to place significant financial strain on households. He emphasized the importance of budgetary measures to counterbalance rising healthcare costs.

Published on January 19, 2026