New tax regime: Life, health insurance may lose lure as tax sops turn optional

Sales of life and health insurance policies, which qualify for income tax breaks, are expected to take a big hit because of the new simplified income tax regime announced in the Union Budget. Tax savings, which was the biggest driver for life insurance, has lost relevance for many as the budget allows taxpayers to pay tax at a much lower rate if they forego exemptions.

“Most middle-class taxpayers will see this as -- lower tax slab, less paperwork. These will become the key motivations. Very few people take life insurance purely for protection - most view it as a savings or investment instrument. Now with that clear incentive gone, there will be a dip,” said a CGM from LIC.

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