The general public held great hopes for the 55th GST Council meeting, but the outcomes that followed the meeting have led to significant disillusionment among the masses. Indeed, it was anticipated from this GST Council meeting that the government might lower the GST rates on term insurance; however, the Finance Minister and the Group of Ministers’ GMO deferred the decision to the next meeting because of insufficient consensus on the matter.
What is the GST imposed on term insurance?
Term insurance is purchased for an extended period. Its premium is provided on an annual, quarterly, and monthly basis. As per the existing GST rates, a GST of 18 percent is applicable on the premium of term insurance. We want to emphasize that because of these elevated tax rates, a lot of individuals refrain from purchasing term insurance.
The regular population held onto this hope
At the 55th meeting of the GST Council, the general public anticipated that Finance Minister Nirmala Sitharaman and the Group of Ministers might lower the GST on term insurance premiums from 18 percent to 5 percent. If this were true, individuals would experience some relief from inflation.
What is Term Life Insurance?
Term insurance is a type of life insurance that offers coverage to a person for a specific duration (like 10, 20, or 30 years). This insurance policy offers the most affordable and easy method for life coverage. If the individual passes away, their family receives the insured amount; however, if the insured survives the term, no funds are returned.
Main Advantages of Term Insurance
Low premium: Its premium is significantly lower in comparison to other insurance plans.
Extensive Coverage: Significant sum assured can be obtained at affordable premiums.
Financial security of the family: The family gets financial support on the demise of the insured.
Tax benefits: Premium payments are eligible for tax benefits under Section 80C and 10(10D) of the Income Tax Act.
Flexibility: Add-on riders such as critical illness, accidental death cover, etc. can be added to it.
