Shares of HDFC Life Insurance tanked around 13% to reach Wednesday's Intraday low of ₹502.60. Similarly, SBI Life Insurance Company crashed over 12% to reach the intraday low of ₹1,069.

What Happened: Nirmala Sitharaman presented the Union Budget for the coming year on Wednesday. The Budget proposed to take away the tax-free status of income made from insurance plans where the aggregate premiums exceed ₹5 lakhs. This change, however, will not apply to ULIPs (Unit Linked Insurance Plan) and policies taken before March 31. 

In simpler terms, this means that the maturity benefit and money-back income people receive from these high-value insurance policies will now be taxable. This will not impact the amount provided in the case of the death of the insured.

This could result in several insurance products such as Endowment and Money Back plans losing traction. 

On top of this the fact that insurance deductions from the old tax regime were not extended to the new tax regime -which is now the default tax regime- also disappointed the sector.

This seems to have soured the mood of the investors leading to a sharp decline in the life insurance companies’ stocks.

Price Action: Here is how the stocks of life insurance companies fared in the late hours of trading on Wednesday.

HDFC Life was trading 10.87% lower at ₹515.50.

SBI Life was down 8.63% at ₹1,114.60.

LIC tanked 8.35% to ₹599.00.

Max Financial Services Ltd crashed 9.97% to ₹752.25.