ICICI Prudential Life Insurance Managing Director and CEO Anup Bagchi has called for tax incentives on long-term insurance policies, saying the move could encourage longer-term savings and help insurers create stable funds for infrastructure investment.
Speaking at NaBFID’s Infrastructure Conclave 2026 on September 17, Bagchi said India needs to address the growing preference for shorter-duration financial products. He suggested additional tax benefits for insurance policies with tenures of 10 years or more, or potentially 15 years or more.
Shorter Savings Could Limit Long-Term Funding
Bagchi pointed to a shift towards shorter-duration liabilities across the financial sector. He said deposits and debt instruments with maturities below three years now account for about 90% of the market, compared with around 60-65% earlier.
According to Bagchi, this trend can make it harder for financial institutions to build liability pools that match the long duration of infrastructure assets. Long-term insurance policies and pension products can provide a more stable source of funds for such investments.
He argued that tax treatment should also consider differences between financial products. Rather than extending incentives across all insurance products, Bagchi proposed targeted benefits for policies with longer tenures.
The proposal comes as the government and financial institutions seek to increase domestic participation in infrastructure financing. NaBFID’s 2026 Infrastructure Conclave focused on mobilising long-term capital and expanding participation from insurance companies and other institutional investors.
Insurers Face Investment and Risk Challenges
Life insurers already invest in long-duration assets, but infrastructure financing brings additional credit, interest-rate and liquidity considerations. Bagchi said shorter liabilities can create duration and cash-flow mismatches when insurers invest in assets with longer repayment periods.
LIC Managing Director Dinesh Pant also called for changes in the instruments and governance framework supporting infrastructure finance. He said insurance and pension funds can play a significant role, but the sector needs safeguards that balance infrastructure funding requirements with policyholder interests.
India already provides certain tax deductions for eligible life insurance premiums under Section 80C, subject to applicable conditions and limits. The Income Tax Department lists life insurance premiums among eligible payments under the section, with a combined deduction limit of ₹1.5 lakh.
Bagchi’s proposal therefore focuses on creating additional incentives specifically for longer-duration insurance policies. Any such change would require a decision from the government and could influence how households allocate savings between short- and long-term financial products.
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