04/12/19
Did you know that you can get tax benefits if you pay premiums towards a Life Insurance policy? Now that’s a win-win situation, isn’t it? Your life is insured as well as you get to save on tax. Let’s make it even better for you - these tax benefits can be claimed under different sections. Let us look at each section one by one to see which all apply to you and how.
As per Section 80C of the Income Tax Act, 1961, the premium that you pay towards Life Insurance policies up to the maximum limit of Rs.1,50,000 is eligible for a tax deduction.
How do I claim this benefit?
All you need to do to claim this benefit is pay premiums towards Life Insurance policies for:
You can buy a Life Insurance policy for any number of your children. It does not matter whether they are minor, major, adopted, married or unmarried.
Is there a minimum lock-in period to retain tax benefits?
To avail tax benefits under Section 80C, you will need to maintain your Life Insurance policy and pay the premiums regularly for the minimum number of years specified in your policy.
Did you know that section 80D of the Income Tax Act, 1961 allows you to claim tax benefits on health insurance premiums as well? So, if you have a Life Insurance plan and it has a health-related add-on cover or inbuilt cover such as a Surgical Care Rider, Critical Illness Rider, Hospital Care Rider, etc. you can avail tax benefits under this section.
How do I claim this benefit?
Well, all that you need to do is declare deductions for premiums you have paid towards health insurance policies for:
Is there a maximum limit of tax exemption under Section 80D?
Nowadays, there are payouts that are tax-free too. If you receive a Life Insurance payout (which is your sum assured or coverage) as a death benefit where you are the nominee, or if you receive your payout/sum assured on maturity as a survival benefit, and this includes bonuses if any - all of these are exempted from tax under Section 10(10D) of the Income Tax Act, 1961.
A payout will not be tax-exempt in the following cases:
Choosing the right tax-saving Life Insurance plan provides you with life cover along with reducing your overall tax. All you need to do is speak to your Insurance Provider to recommend to you the right policy to meet your primary need of getting Life Insurance along with tax benefits. Both ways, you stand to win!