Insurance rarely gets the same attention as mutual funds or fixed deposits at a typical financial planning conversation, yet it quietly shapes tax outcomes, retirement income, and how wealth eventually passes to the next generation. Ashutosh Financial Services organises sessions like these regularly because the team has seen, across years of client conversations, that people often buy insurance without understanding what it actually does for their finances. Good decisions start with clear knowledge, and that belief sits behind most of the firm’s educational initiatives.
On 26th February 2024, Ashutosh Financial Services hosted “Current Perspectives on Insurance Planning in India” in Rajkot for an audience of high net worth individuals, with RDK and DDK speaking on the subject. Given the audience, the session moved beyond basic insurance awareness and focused on how life and general insurance products can be structured for tax efficiency, wealth transfer, and business planning — areas where HNIs typically have more room to manoeuvre and more at stake.
A significant part of the session centred on tax planning through life insurance, particularly the provisions under Section 10(10D) of the Income Tax Act. The rules here have tightened over the years. Policies issued before 31st March 2003 carry no restrictions and remain fully tax free. Between April 2003 and March 2012, exemption depends on the premium staying within 20% of the sum assured. From April 2012 onward, that threshold dropped to 10%. More recently, ULIPs (Unit Linked Insurance Plans) with annual premiums exceeding Rs. 2,50,000, and other life insurance policies with premiums above Rs. 5,00,000, lose their exemption altogether — and if a person holds multiple such policies, the premiums are aggregated for this purpose. Death benefits, however, remain tax free regardless of these premium limits.
One idea explored in detail was using ULIPs as a tax free alternative to systematic equity investing. A ULIP allows premiums to be invested in equity funds alongside providing a sum assured, with the flexibility to switch between equity and debt options. Because withdrawals and maturity proceeds fall under the Section 10(10D) exemption (within the prescribed limits), the compounding that happens inside the policy escapes the capital gains tax that would otherwise apply to a comparable mutual fund investment. Illustrative numbers shared during the session showed how a monthly premium invested over a working lifetime could grow into a substantial, tax free corpus by retirement age — a meaningfully different outcome compared to the same money growing in a taxable investment.
A similar principle was discussed for fixed-return planning, where assured return income plans were positioned as a tax efficient substitute for traditional fixed deposits, offering guaranteed maturity value along with the Section 10(10D) benefit, subject to the same premium ceilings.
For business owners in the room, the session covered employer-employee insurance structures across proprietorships, partnerships, and companies. Under this arrangement, the employer pays the premium on behalf of an employee and claims a full deduction under Section 37(1), while the underlying investment appreciates much like an equity SIP. The comparative illustrations shown — measuring corpus growth inside such a policy against the same amount invested directly in equity mutual funds by the business — indicated a meaningful advantage in favour of the insurance route once the applicable tax on gains was accounted for, largely because the premium reduces taxable income upfront while the mutual fund route does not offer that deduction.
Estate planning was another thread that ran through the discussion, with whole life insurance policies presented as a way to build a large, tax free corpus for the next generation. These policies, structured with a tenure running up to 100 years and premiums invested in equity-oriented funds, can act as both a wealth accumulation tool and a mechanism to pass on assets outside the usual tax net that applies to other investment gains. Pension plans were covered along similar lines, with the commuted value of a pension remaining tax free under Section 10(10A), even though regular pension receipts are taxed at slab rates.
The session then shifted to general insurance, walking through how HNIs can control costs while securing better terms across motor, fire, health, personal accident, workmen compensation, and group health insurance. Recurring themes included studying policy features carefully before purchase, using add-on covers selectively rather than broadly, maintaining accurate disclosures (particularly around vehicle ownership changes, pre-existing diseases, and property modifications), and comparing claim settlement ratios and service reviews before choosing an insurer. A panel discussion with representatives from several leading life and general insurance companies followed, giving attendees a chance to hear differing views on these questions directly from the industry.
Sessions like this reflect a simple conviction: insurance decisions carry tax and estate planning consequences that are easy to overlook until they matter most. Ashutosh Financial Services continues to organise these initiatives because informed decisions, made well ahead of time, tend to serve individuals and businesses far better than decisions made under pressure.
