People usually avail of life insurance plans to protect their family from financial adversities in the event of a mishap. But what is life insurance? Life insurance ensures that the family of the insured person gets the sum assured after in case of their untimely demise. In most cases, it also provides financial protection in case of permanent disability. However, with the introduction of GST, certain changes were observed in almost every sector. The insurance sector is no exception. Let’s take a look at the changes in life insurance plans due to GST implementation.
Since its announcement, the Goods and Services Tax, or GST, has been the subject of much debate in India. This is because almost every industry in the country has been influenced in some way by the implementation of GST and its associated rules. The rate of GST applicable on life insurance differs depending on the type of life insurance policy.
1) Term insurance plans
Term insurance is a pure-protection plan that provides a huge sum assured at relatively low premiums. GST applicable on term insurance plans is 18% of the premiums payable.
Unit Linked Insurance Plans (ULIPs) are the products that offer twin benefits of insurance and savings. In the case of ULIPs, a certain portion of the premiums paid goes to provide life cover to the insured person while the remaining portion is invested in the underlying assets. On premiums paid in …