On February 1, 2023 presentation of the budget, the government proposed that income from policies issued on or after April 1, 2023 with an aggregate premium of more than Rs. 5 Lakhs would no longer be tax-exempt.
This means that maturity benefits receivable on traditional insurance plans such as Endowment and Money-back plans will be taxable if their yearly premium exceeds Rs. 5 Lakhs.
While these new rules would NOT be applicable to ULIP plans, this naturally makes traditional insurance plans less attractive as a savings instrument.
In such a scenario, you would be better off investing your money in other investments, while using a term-life insurance to cover your risk of death or disability.
insurancepe recommends term-life insurance.