The officers of LIC are concerned over the growth of first-year premium income, with policy buyers evaluating the benefit of lower taxes under the optional new income tax regime.

The largest public sector life insurance company registered an 11.3 per cent growth in first-year premium in 2018-19, with collection at Rs 31,326.22 crore against Rs 28,146.40 crore a year ago, according to data from insurance regulator IRDAI. LIC holds a 42.79 per cent market share in first year premium collection.

The budget has proposed an alternative tax regime with lower rates. But anyone taking the benefit of the lower rates will have to forego the exemptions. LIC premiums attract exemption under Section 80C of the Income Tax act.

According to LIC officers, first-time policy buyers will now evaluate their benefits from the lower rates before investing in an LIC policy. They said the proceeds from the policies are utilised for funding infrastructure projects of the government as well as widen insurance penetration.

“LIC plays a crucial role in funding infrastructure projects. Exemptions give a fillip to individual investment, which in turn is utilised for nation building. We fear an impact on first year premium growth especially if the first time buyers opt for no exemption an low tax,” said Nirmal Roy, president of Federation of Class 1 officers Association, eastern zone, LIC.

Three associations, which represent 98 per cent LIC officers and employees, have protested on Tuesday against the government’s move to float the shares of the LIC.