Major Announcement in BUDGET 2018-19 Relating to Insurance Sector
Three public sector general insurance companies National Insurance Company Ltd., United India Assurance Company Limited and Oriental India Insurance Company Limited will be merged into a single insurance entity and will be subsequently listed.
Government will launch a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization. This will be the world’s largest government funded health care programme. Adequate funds will be provided for smooth implementation of this programme.
Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY) has benefitted 5.22 crore families with a life insurance cover of Rs.2 lakh on payment of a premium of only Rs.330/- per annum. Likewise, under Pradhan Mantri Suraksha Bima Yojana, 13 crore 25 lakh persons have been insured with personal accident cover of Rs.2 lakh on payment of a premium of only Rs.12 per annum. The Government will work to cover all poor households, including SC/ST households, under these in a mission mode.
The Government will expand the coverage under Prime Minister Jan Dhan Yojana by bringing all sixty crore basic accounts within its fold and undertake measures to provide services of micro insurance and unorganized sector pension schemes through these accounts.
Raising the limit of deduction for health insurance premium and/ or medical expenditure from Rs.30,000/- to Rs.50,000/-, under section 80D for Senior Citizens. All senior citizens will now be able to claim benefit of deduction up to Rs.50,000/- per annum in respect of any health insurance premium and/or any general medical expenditure incurred.
Raising the limit of deduction for medical expenditure in respect of certain critical illness from, Rs.60,000/- in case of senior citizens and from Rs.80,000/- in case of very senior citizens, to Rs.1 lakh in respect of all senior citizens, under section 80DDB
Extension of Pradhan Mantri Vaya Vandana Yojana up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of Rs.7.5 lakh per senior citizen under this scheme is also being enhanced to Rs.15 lakh.
It is proposed to provide that in a case where premium for health insurance for multiple years has been paid in one year, the deduction shall be allowed proportionately over the years for which the benefit of health insurance is available.
- Major decision to merge 3 Public sector General Insurance Companies into 1 company. This will help to reduce loss and unhealthy competition among the 3 PSU companies. This will be a mammoth task as there will be some resistance from employees as they may fear layoff. However their will be economy of operation.
- No change in deduction under section 80C
- No change in deduction under section 80D for comman man. Exemption limit increased to Rs.50,000 for senior citizens under section 80D
- Launch of National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization. It needs to be seen what would be the proposed premium. Will government insurance companies handle this scheme. If the rates are too low it may bring huge financial burden on government insurance companies unless it is adequately supported by government.