Latest news with #Bharindwal
Indian Express
14 hours ago
- Business
- Indian Express
GST on health, term insurance may be scrapped or cut to 5%
The Goods and Services Tax (GST) reforms expected around Diwali this year could likely lead to scrapping of the tax on insurance policies — or at least a calibrated reduction to 5 per cent — making insurance more affordable, improving financial security for millions and accelerating insurance penetration in India. The long-anticipated reduction in GST on insurance is under active consideration by the government, although it is expected to result in annual revenue loss of approximately Rs 17,000 crore, said a source. There is a worry, however, among insurance companies that they will lose the input tax credit (ITC) claim if the GST is completely abolished, which will push up operating costs for insurers. Industry veterans have long criticised the 18 per cent on health, term and ULIP insurance premiums, particularly for health and term life insurance, as a deterrent to wider insurance adoption in India. If the government were to abolish this tax or bring it down to 5 per cent, the move could have far-reaching consequences — not only for customers and insurance companies, but also for public health and financial inclusion in India. According to Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI), the proposal to scrap GST on insurance would reduce the cost of premiums for policy-holders, thereby improving affordability and encouraging greater penetration of insurance across life, health and general insurance segments. 'From a policy-holder's perspective, this is a welcome move that aligns with the national vision of 'insurance for all by 2047',' Bharindwal said. For policy-holders, GST reduction or exemption will make insurance more affordable, especially in retail health and micro-insurance, directly benefiting the masses. For example, if a family health insurance plan costs Rs 50,000 annually, the policy-holder ends up paying Rs 59,000 including GST. For term insurance, where affordability is a major selling point, GST abolition could make basic life coverage more accessible to lakhs of low- and middle-income families. Insurers say that lower premiums directly translate into better affordability and greater coverage, particularly for first-time buyers who often hesitate due to the added tax burden. 'For starters, the speculation is that the changes would be on the life insurance side and not the general insurance side. Based on that assumption, for retail consumers, I think it's a step in the right direction. When you reduce or take away the burden on the consumer to the extent of 18 per cent for a service, especially when that service is being taken through the disposable income after tax, it's bound to increase the penetration,' said Abhijit A Sethi, Chief Operating Officer, Howden (India). India has historically struggled with low insurance penetration – it was 3.7 per cent in 2023-24, and 4 per cent in 2022-23. The insurance penetration for life insurance industry declined marginally to 2.8 per cent in 2023-24, from 3 per cent the previous year. The penetration for non-life insurance industry remained the same – 1 per cent in 2023-24 and 2022-23 — according to insurance regulator IRDAI's Annual Report for FY24. 'The government should also check the spiralling medical inflation which is adding to health insurance premium. This is now around 14 per cent. It should bring a regulator for the healthcare sector and uniformity in hospital expenses. Customers will really benefit and the premium will become stable,' said an official of an insurance company. 'With rising medical costs and increasing awareness post-Covid, health insurance is slowly becoming a necessity rather than an option. However, high premiums continue to be a barrier for many people in rural and semi-urban areas. A zero-GST regime could act as a policy nudge, encouraging more people to opt for health insurance.' Industry insiders say that removing GST would likely lead to a spike in first-time policy-holders, especially among the younger, under-insured population. More individuals and families may also upgrade from basic coverage to more comprehensive plans. This shift would not only reduce the healthcare burden on individuals but also help the government move toward its goal of universal health coverage. For the government, a lower GST will encourage penetration, expand the policy-holder base and, in the medium-to-long term, increase overall tax collections due to growth in the industry, said an insurance official. Non-life insurance segment mobilised a premium of Rs 3.07 lakh crore, up by 6.21 per cent, in FY25. Life insurers collected Rs 3.97 lakh crore premium in FY25, an increase of 5.13 per cent. Input tax credit worthy Insurance companies are concerned that a zero GST regime could lead to a rise in operating costs. Bharindwal of IBAI said to avail ITC, there has to be a GST component (even if it is at 5 per cent or lower). 'A complete exemption (nil GST) would block ITC, while a reduced rate of 5 per cent would still allow a set-off. Hence, from an industry operations perspective, a reduction in GST rate (say to 5 per cent) may be more practical than a complete exemption,' he said. As a nil GST is likely to impact the balance sheets of insurance companies, 5 per cent will be ideal from the industry point of view, said a top official of an insurance firm. He said a complete exemption may increase input costs as ITC will not be available. A calibrated reduction (to 5 per cent) may strike a balance – ensuring affordability for customers while retaining ITC benefits for industry players. ITC is a mechanism under the GST system that allows businesses to claim credit for the tax paid on purchases (inputs) used to make taxable supplies (outputs). Put simply, when a company buys goods or services for your business, it pays GST on those purchases (inputs). Later, when it sells the products or services, it collects GST from its customers. The company can reduce the tax it pays on sales by claiming credit for the tax paid on purchases. In summary, while nil GST will certainly benefit customers, a moderate GST rate with ITC retention could be a more sustainable solution for the industry, Bharindwal said.
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Business Standard
a day ago
- Health
- Business Standard
Premium cost, add-ons: Things to know when taking parents' health insurance
Rising medical costs and frequent hospital visits in old age make health insurance for parents a critical financial decision. But buying a policy for those above 55 years is far from simple. Premiums are high, riders are many, and fine print can be tricky. Experts explain what to keep in mind before signing up. Premiums rise sharply with age The cost of insuring parents depends heavily on their age, health history, and city of residence. Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), said, 'For parents above 55 years, a Rs 10 lakh individual policy usually costs between Rs 35,000 and Rs 60,000 annually per parent. For those above 65 or with pre-existing conditions, the premium can even cross Rs 70,000.' Ashish Yadav, head of products and operations at ManipalCigna Health Insurance, noted that industry averages vary between Rs 20,000 and Rs 40,000. 'Our Prime Senior plan, for example, starts around Rs 20,000–30,000, with flexibility in features depending on affordability,' he added. Individual vs floater For parents alone, all three experts recommend individual plans over family floaters. 'In floaters, if one parent has a major claim, the other may be left with little or no cover,' Bharindwal explained. Siddharth Singhal, business head – health insurance at added, 'Since the premium of a floater is pegged to the oldest member, costs rise significantly, and cover can get exhausted faster.' Must-have riders for elderly parents Experts recommend specific add-ons that can protect against hidden medical expenses. · Critical illness rider: Provides a lump sum on diagnosis of serious diseases such as cancer or stroke. · OPD and day-care cover: Useful for frequent doctor visits and minor procedures. · Room rent waiver: Prevents restrictions on hospital choice. · Consumables cover: Covers costs like syringes and gloves, which otherwise add up. · Reduced waiting period for pre-existing diseases: Allows faster coverage for conditions like diabetes or hypertension. Avoid these common mistakes According to Bharindwal, buyers often err by chasing the cheapest plan. 'Cheaper policies come with restrictive sub-limits, co-pays, or exclusions,' he warned. Yadav added that underestimating coverage is another risk: 'A Rs 5 lakh sum insured may not be enough given medical inflation. Rs 10 lakh or higher is safer.' Singhal pointed to overlooked benefits such as domiciliary care and AYUSH cover. ' Senior citizens often need treatment at home due to mobility issues, so domiciliary care and nursing cover are vital,' he said. A slightly higher premium is a worthwhile trade-off if it ensures comprehensive coverage, experts agreed. Buyers should check waiting periods, hospital networks, and add-ons carefully before choosing. As Bharindwal summed up, 'A carefully chosen plan ensures peace of mind during medical emergencies.'
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Business Standard
09-05-2025
- Business
- Business Standard
India-Pakistan conflict: Your insurance policy may not cover 'act of war'
Does your life or term insurance policy cover claims arising from an 'act of war'? With tensions between India and Pakistan on the rise, now may be a good time to review your insurance documents and reassess whether your financial protections are still adequate. According to Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), most life and term insurance policies do not. 'Standard life or term insurance policies typically exclude deaths caused by war or war-like operations,' said Bharindwal. 'There's usually a 'war exclusion' clause built in that applies to civilians as well as active military personnel.' The war exclusion clause — War, whether declared or undeclared — Invasion or act of foreign enemy — Hostilities, civil war or rebellion — Insurrection or any similar events This means that even if the policy is active and all premiums are paid, a death resulting from these causes may not be covered. 'If a person dies in a bomb explosion in an active conflict zone abroad, and it's traced back to a war-related event, the insurer can reject the claim,' said Bharindwal. 'But if the death was from an unrelated cause, like an illness or accident, the claim might still go through.' Sandeep Katiyar, co-founder and CFO of Finhaat, explained further. 'Insurers typically have war exclusion clauses baked into the terms,' he said. According to him, claims may be rejected if death results from: — Participation in war or war-like operations — Terrorist activities — Acts of foreign enemies or invasions — Being in a known conflict zone, even if not directly involved However, he added, 'If an Indian expat living in the Middle East dies of a heart attack, and there's no link to the ongoing conflict, the claim can still be honoured — provided there are no geographical exclusions in the policy.' Are there exceptions? 'Some group term insurance plans for defence personnel or corporate insurance for employees posted overseas may include specific cover for such risks,' said Bharindwal. 'But these aren't standard and usually need custom underwriting.' Government bodies like LIC or the Army Wing offer war-risk cover to military personnel through schemes like Armed Forces Group Insurance. Civilian policies from private insurers, on the other hand, usually stay away from war-related coverage. Katiyar said some corporate policies — especially in high-risk sectors like oil and gas, media, or diplomacy — may be customised to include group accident or life cover with such provisions. High-risk international travel policies from general insurers such as Tata AIG or ICICI Lombard may include terrorism cover, but under health or personal accident categories — not life insurance. What policyholders should check Katiyar listed a few things individuals should watch for in their policy documents: — Read all exclusions carefully, especially those mentioning war, terrorism, or high-risk jobs — Check for optional add-ons like accidental death or terrorism cover — Review territorial limits — some policies exclude coverage outside India — For NRIs, confirm whether being in a high-risk area affects claim eligibility 'If you see terms like 'acts of war', 'civil commotion' or 'terrorism' in the exclusion section, it's a red flag,' he said. 'Clarify with your insurer.' He added that policyholders living or working in high-risk zones should consider: — Comprehensive international life insurance that includes conflict zones — AD&D (Accidental Death and Dismemberment) riders with terrorism cover — Group insurance negotiated by employers with explicit war-risk inclusions — Global insurers who state inclusion of conflict zones, subject to certain conditions 'Most importantly, always declare your location and job profile truthfully. If you leave that out, the insurer might reject the claim later — even if the death wasn't war-related,' said Katiyar.
