Life, business insurance policies dip by 20 per cent after demonetisation, GST
Chennai: Number of customers seeking life insurance policies and other business insurances has reduced by over 20 per cent due to demonetisation and implementation of GST.
“For a corporate company or individuals paying insurance premium of Rs 5 lakh, 18 per cent GST is now computed. This means Rs 90,000 has to be paid extra without any new value addition or new services. This has reduced footfall and people now opt for low premiums,” disclosed a senior manager of National Insurance Company.
Those paying vehicle and medical insurance are also not spared. Before GST, 15 per cent of tax was levied on premiums and now adding three per cent to it through GST has increased the premium amount for all customers.
Insurance policy holders are upset and there is fear that insurance coverage will decrease if tax slabs are not reduced immediately, the manager said.
Already, life insurance coverage has been reduced from 4 per cent to around 2.6 per cent and if heavy tax is imposed insurance cover will further reduce making public vulnerable for financial disasters, he added.
“GST for life insurance is completely a disaster for LIC agents spread across the country. LIC has several lakhs of policy holders and GST has started adversely affecting public as they are now forced to pay extra in their premium payments,” said G. Chinnasamy, president, Chennai City Branch (20) Agents Association.
Life insurance is all about a person's commitment to his family members hoping that the insurance company will take care of his family in case of sudden demise. A policy holder pays instalments for years to the government and now forcing him to pay extra through instalments is really a harsh act on customers, said Chinnasamy.
“Most of my business clients have sent their cheques calculating the regular payments when we insist for a three per cent revision in tax due to GST they are shocked,” said K. Sekar associated with an Insurance company.
Insurance is service industry and its sole objective is to help a policy holder at times of distress due to loss in business, life or damage to properties.
Charging 18 per cent tax without any service or value addition is totally unfair, he said confirming that the business enquiries have reduced by 15 per cent in the past two months.
