Ahead of the budget, the insurance industry has urged the government to move ahead with the proposal to raise foreign direct investment cap to 49 per cent and provide separate tax incentives for policies that have long tenures.

"There has to be separate category for life insurance for encouraging long-term investments. So, we are not wanting short-term kind of tax benefit. The industry expects separate tax benefit for long-term products that have five years or more tenure," Metlife India managing director Rajesh Relan told PTI.

Such as move will promote long-term debt market in the country and help fund fund infrastructure, he pointed out.

Max New York Life managing director Rajesh Sud said increase the FDI ceiling to 49 per cent can bring in the much-needed capital for the growth of the sector and long-term development.

This will also enrich the business by bringing world-class business practices and processes, expand distribution capabilities and deepen market penetration, he added.

Echoing similar views, Aviva India managing director TR Ramachandran said, "we would recommend a separate limit for deductions under Section 80C for long-term saving instruments like life insurance."

Currently, the deduction under Section 80C of the Income Tax Act also includes short-term saving instruments like some mutual funds and fixed deposits.

Life insurance and pensions are the only segments of financial services that address the needs of individuals in the long-term, Aviva's Ramachandran said, adding, the government should look at encouraging people to save for long-term.

Forwarding the wishlist of the life insurance sector, the Life Insurance Council said carry forward of losses for long-term gestation insurance business should be increased to 10 years. At present, insurers are allowed to carry forward losses for only eight years.

It is also universally recognised that life insurance industry has a long gestation period and it takes minimum eight-ten years to break even, Life Insurance Council secretary general SB Mathur said.

There is an urgent need to relax the provision of carry forward of losses on one time basis at least in the first 10 years of the operations of the life insurance company, Mathur said.

According to DLF Pramerica Life Insurance managing director Kapil Mehta, since insurance is a long-term business, the sector would like the government to offer meaningful tax incentives on financial products that have more than five years tenure.