Policyholders do not have the major intention about the personal accident insurance covers. However, it is an essential cover for the majority of the people it is not being purchased normally. If in the union budget 2022 they mentioned that provide the tax deduction towards the premium furnished to buy the Personal accident insurance then this could result in the revisions of the circumstances.
Usage Towards Personal Accident Cover
Personal accident insurance covers a specific sum of money towards the death, permanent total disability, or partial disability that an individual faces. Rs 1000 to Rs 1200 will be the premium furnished towards Rs 10 lakh premium as per the different covers upon the offer.
People do not buy that despite these premiums posing small charges. There are various families that suffer from the financial losses which are made through the accidents that draw deaths and disabilities. There are approximately 3.74 lakh people who died because of accidents in FY2020. There are 55.9% of the total deaths held in 2020 whose age range is from 18 to 45 years showing that there is a need for personal accident insurance cover towards the productive age.
“Personal accident cover is legally mandatory for all vehicle owners. It is a part of the motor third party insurance cover that is required to be bought each time a vehicle is purchased. However, the penetration has always been quite low for this segment,” Anil Kumar Aggarwal, Managing Director and CEO, Shriram General Insurance mentioned. In metro cities, the customers seek the insurance cover on purchasing the new vehicle to follow the law and normally they carry on with the scheme within the duration of the policy. People do not follow the same rule seriously one of the reasons behind this is that there is no pressure towards the policy in rural areas and hence prevent opting for motor insurance he commented.
Government initiatives such as accidental insurance cover for all Jan Dhan Account holders directed towards some awareness among the insurance purchasers. The online mode supports opting for the same cover to the insurance purchasers. Because of the less ticket size of the insurance premium and resultant low commission payouts with respect to the executions the same policy does not pose on the priority of the people along with the corporate agents.
Tax Breaks Like Health Policies Requirement
Health insurance becomes the centre of people and this is formed because of the tax breaks towards furnishing the expenses towards the hospitalization. “In the case of life and health insurance, tax incentives in addition to increased awareness, have proved effective in driving certain products. Any tax benefits or breaks are likely to increase awareness and consumer willingness to purchase a personal accident cover and subsequently increase penetration levels for the segment,”
“M Nagaraja Sarma, Secretary-General, General Insurance Council specified that Premiums paid for the purchase of non-life insurance covers offering protection to individuals – be they personal accident insurance or home insurance – need to be given dedicated income tax deduction, just like a health insurance premium. This will ensure an increase in penetration of these products.”
Stakeholders in the industry could begin a demand towards the separate tax deduction this shall be good to find out that this stand came through the policymakers. “Generally, a personal accident policy guards an individual against accidental damages and covers disability, loss of life, etc. While life and medical insurance covers have wider applicability, accident cover is more of a contingent event,”
Various people see it easier to access and purchase personal accident insurance if the goods and services tax at 18% on the premium furnished gets diminished. Nilesh Sathe, Former Member- Insurance Regulatory Development Authority mentioned that “The new tax regime aims to do away with deductions that the old tax regime offered. With no tax relief to insurance premium under new tax regime, it is unjustified to charge 18 per cent GST on insurance products such as term life, health and personal accident insurance policies.”
“Sharma added that Insurance products offering protection to individuals are taxed at the rate of 18 percent. This rate of goods and service tax should be brought down to 5 percent to make these products accessible to a wider audience.”
