Ahead of the Union Budget 2026, leaders from the life insurance sector have outlined a set of fiscal and regulatory measures aimed at improving retirement readiness, expanding insurance penetration and sustaining long-term economic growth.
VenkyIyer, Co-Chairperson of the Insurance Awareness Committee (IAC-Life), said taxation has a disproportionately harsh impact on pension earners. He proposed aligning pension taxation with other fixed-interest instruments by taxing only the interest or gains, a move he said would enhance post-retirement income while mobilising long-term savings through life insurance solutions. Iyer also called for a standard deduction for pensioners who do not commute their corpus to ensure tax parity across all pensioners.
Rushabh Gandhi, MD & CEO of IndiaFirst Life Insurance, said the industry is looking to Budget 2026 for policy measures that strengthen long-term financial security in line with the vision of “Insurance for All by 2047”. Describing life insurance as a long-term social protection product, he sought enabling GST input tax credit for insurers post exemption to sustain affordability and customer-friendly pricing. Gandhi also urged regulatory and tax parity between pension products offered by life insurers and the National Pension System to create a level playing field and widen retirement coverage. He added that feature-rich protection plans, accelerated cover for financial inclusion schemes and a strong focus on social security are critical to building financial resilience.
Meanwhile, Mr. Ajit Banerjee, President and Chief Investment Officer of Shriram Life Insurance Company, said the Union government is expected to maintain fiscal prudence while continuing capital expenditure to support GDP growth, though with a narrowing scope. He expects higher allocations for defence, railways, shipbuilding and alternative energy, along with increased spending on education, health, climate-risk mitigation and artificial intelligence research. On taxation, Banerjee said raising insurance deductionseither by carving them out of Section 80C or increasing the limitwould help boost insurance penetration further.