Bangalore: In Budget 2012, initially there was no significant declaration for the insurance sector. But there are some alterations which may change the whole scenario of insurance policies.

Except for pension plans, all regular-premium life insurance policies issued after April 1 will have to offer a minimum protection cover of 10 times the annual premium, else it will not be eligible for tax benefits under Section 80C and 10 (10D). This mandated cover amount was 5 times the annual premium till now. According to norms of Section 80C, life insurance premium up to 1 lakh is eligible for tax deduction and Section 10 (10D) exempts maturity proceeds from tax.

Due to this change, Unit-Linked Insurance Plan (Ulips) and Endowment Plans, both will be affected. However, expert says that most term plans will fulfill the new requirement. “This is a welcome move as it will ensure minimum life cover to the policyholders. The new requirement will ensure that they have some protection over a longer period of time”, says Kamalji Sahay, CEO of Star Union Dai-Ichi Like, as quoted by ET.