“India is facing a widening retirement savings gap, which is expected to reach $85 trillion by 2050. To address this, the Budget this year may extend the ₹50,000 deduction to all pension and annuity products and reduce tax on annuity payments, making retirement income more fiscally efficient and attractive to savers,” B Satishwar, MD & CEO, Bandhan Life, told businessline.
Currently, ULIPs have an annual contribution limit of ₹2.5 lakh for tax-free tenure. If the Budget increases the ULIP ceiling to ₹5 lakh, like traditional products, the tax benefits will become more understandable to everyone, he added.
According to Tarun Chugh, MD and CEO, Bajaj Life Insurance, with the Union Budget 2026-2027, there is an opportunity to strengthen healthcare affordability through higher public healthcare expenditure and a sharper focus on prevention.
“Introducing separate and enhanced tax benefits for OPD services and preventive health screenings, beyond the current limits of Section 80D, would encourage wider adoption of preventive care,” Chugh said.
Catalyst for change
“Achieving the goal of ‘Insurance for All by 2047’ requires a clear, time-bound roadmap, supported by targeted policy and budgetary measures. The focus should be on building shared digital insurance infrastructure such as interoperable platforms and cost-efficient distribution frameworks that can be used across the industry to increase reach, especially among start-ups, said Sharad Mathur, MD and CEO, Universal Sompo General Insurance.
The budget could also play a catalytic role by allocating sustainable funding to insurance awareness and literacy initiatives, especially in rural and low-income regions where uptake remains uneven. At the same time, government insurance and social services should be structured to enable broader participation of private insurers through more consultative and business-friendly frameworks, Mathur said.
While the government has already exempted GST on private health and life insurance policies – an important step for affordability for policyholders – the next challenge lies in addressing the cost burden across the insurance value chain.
“The Budget can also play a role in strengthening risk pooling for healthcare, MSMEs, climate and catastrophe risks through structured public-private partnerships and national risk frameworks,” said Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI).
If the 2026-2027 Budget aligns fiscal policy with these structural priorities, insurance can meaningfully evolve into a reliable financial safety net for households and businesses, supporting resilient and inclusive economic growth. Medical inflation remains one of the biggest challenges facing India’s healthcare system, estimated at 11.5 to 14 percent, one of the highest in Asia.
“While measures such as removing GST on insurance premiums and allowing 100 percent FDI in insurance can improve affordability and resilience of the sector, rising medical costs continue to put pressure on Indian households,” added Srikanth Kandikonda, Chief Financial Officer, ManipalCigna Health Insurance.
Published on January 19, 2026
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