Will a lower cover mean higher returns from insurance plans?
Insurance is a tax-efficient and long-term risk management tool that helps one save in a disciplined manner while enjoying a certain risk cover
The lower sum assured should result in better returns because less mortality charges will be deducted
The new product regulation for life insurance policies has reduced the minimum sum assured requirement from a minimum of 10 times the annual premium to seven times the annual premium. While this makes the minimum life insurance cover more uniform across age groups, it raises some concerns. The reduction in life insurance cover may translate into better returns for investment-linked products, but it could be counterproductive given that these policies won’t enjoy tax benefits if the sum assured is not at least 10 times the annual premium. Disha Sanghvi asks experts how the new rules help