In a sense, the launch of the New Tax Regime (NTR) was a turning point for Indian life insurance industry. It was no longer as simple as selling tax benefits towards the end of the year. Millions of people in the lower and middle-income groups transitioned to the NTR. In this regime, you could pay a lower rate of tax with higher tax-free limits if you forego tax exemptions under Section 80C and other provisions. For small tax payers, this not only meant more cash flows, but saved them policy hassles. 

LIC had thrived for close to 70 years by selling the tax benefits of life insurance. Their hold was so strong, that even after 25 years, private insurers have not been able to capture more than 30% of the vastly expanded life insurance pie. That is what needs to change. After all, life insurance is taken because your life is valuable and your absence can leave a financial void for the family. That is so critical, irrespective of whether you have tax shields or not. That mindset change will not come easily, but it will come!. The challenge is for LIC and others to be prepared for the new arrangement! 

There are two key shifts likely here. Firstly, the way life insurance is sold is already changing, and is likely to be the trend of the future. Life insurance is a core part of your financial plan and must fit into your financial goals. The days of selling life insurance for tax breaks is over and life insurance has to be sold as a financial solutions package. Secondly, this has larger implications for how the life insurance industry rewards its key distributors. If the distributors are going to contribute more towards advisory and client retention, they have to invest in training. It means, a bigger share of the value addition in insurance must go to the distributors and financial advisors, rather than to the insurance originators. 

The prospects for application of AI in life insurance selling is humongous. The life insurance distributors can use AI to not only prospect for new customers, but also to mine big data and customize the life products for them. By combining the power of databases, real time info, and social media; insurance company can get live updates on the health and life risks for certain classes of people. These can be fed into the AI system to make the output automated. AI has got huge applications for life insurance and it is time for life insurance to take the lead. The old life insurance model is passe. It is time to look closely into the future!