The budget proposed that annual income accrued from insurance policies with an aggregate income of more than Rs 5 lakh will be liable for taxation from the new fiscal year. While there are many plans to opt from, you can invest into HDFC Life Sampoorn Nivesh and be a part of India’s growth story.

The Union Budget 2023 has proposed that annual income from high-value insurance policies beyond the aggregate premium of Rs 5 lakh will be liable for taxation from April 1, 2023. What this means for the average taxpayer is that any income generated from one or more traditional insurance policies that you may hold with a collective premium of more than Rs 5 lakh will be added to your total income for the year and taxed at the applicable tax slabs. Till now, this amount was counted as tax free returns.

The changes will be affected to Section 10 (10D) of the Income Tax Act, which provides for income-tax exemption on the sum received under a life insurance policy. The memorandum explaining the latest exemptions made to the Finance Bill 2023 states that over the years, it has been observed that many High Net Worth Individuals (HNIs) have been misusing the exemption provided under Section 10 (10D) of the Income Tax Act by investing in policies having large premium contributions and claiming exemptions on the sum received under such life insurance policies.

The taxation proposal will not be applicable to those policies which are issued on or before March 31, 2023, or in cases where a tax exemption has been provided on the amount received on the death of the insured person. The good news is that the proposal does not impact ULIPs or term insurance plans, for which the prevailing rules continue to be applicable even in the new fiscal year.

Finance Minister Nirmala Sitharaman has stated that this budget proposal to scrap benefits for income from high value insurance policies will not have an effect on the deepening of insurance penetration. Contrary to popular perception, the move is expected to increase the number of people that fall under the ambit of insurance in India today as insurance companies are now expected to broad base the policies and increase penetration among the masses with new and old product offerings.

With the new rules in place, make sure you do the required due diligence while purchasing an insurance policy. There are several insurance plans worth considering in the market, but the one that stands out is HDFC Life Sampoorn Nivesh, a comprehensive Unit Linked Non Participating Life Insurance Plan that offers you an opportunity to be a part of India’s growth story.

A ULIP plan offers you the flexibility to invest across equity, debt, and other asset classes depending upon which segment is performing well, thereby allowing you to participate in India’s growth story. This is a unique insurance cum investment plan that allows you to spread out your investment across 10 low, medium and high risk fund options to ensure good returns. As an investor, you can choose either all or a combination of the available fund options, depending upon your risk appetite.

You can even switch from one fund to another, or from one portfolio strategy to another. This option also offers varied benefit options so that you can customise your insurance plan to meet your individual protection needs.

For starters, you can choose your investment term – this can range between 10-35 years for Single Pay premium payment option and 85 minus your age at the time of taking the plan for Limited/ Regular Pay payment options. There is also an option to take the benefit for Accidental Death or to enhance the value of your fund after 10 years if you feel your financial goals need to be revised.

Another major benefit that this plan offers, especially in the aftermath of the Covid-19 pandemic is that the maximum sum assured can go up to 40X of annual premium amount paid, which is more competitive than what is offered by other plans in the market.