Can I Claim Term Insurance Tax Benefits Under Section 80D?

As we all know, Section 80D gives you a tax break on health insurance premiums. Taxpayers, on the other hand, have little knowledge of how to claim tax benefits on term insurance under Section 80D. If you purchased term insurance with riders and added additional coverage, you can easily request a tax benefit. This could include anything from acute disease to surgery or hospitalisation. Let us first understand what a term insurance plan is.

What is a Term Insurance Plan?

Term insurance is a pure protection plan that is effective for a set period of time after a predetermined premium is paid. If the insured person dies during the term, the nominee receives a death benefit, which can be in the form of a lump sum or monthly instalments. This means that your family can continue to live their lives as they have in the past while you were there, and all of their life goals will be met. However, you will not receive any maturity benefits if you survive the term policy.

Term insurance has a number of other advantages. For people of all income levels, it is both cost-effective and necessary. There is also the option of adding term insurance riders for a small additional fee. These are optional plans or features that you can purchase if you require additional coverage for specific illnesses, disabilities, accidental death, or a premium waiver.

Term insurance provides tax advantages under Sections 80 C and 10(10D) of the Income Tax Act 1961 (the Act), subject to the Act's limitations. You can claim a deduction of up to Rs 1.5 Lakh per year on premiums paid under Section 80C. The death benefit of your term insurance policy is tax-free under Section 10(10D), as long as the sum assured is at least ten times the annual premium paid.

Can I Claim Term Insurance Tax Benefits Under Section 80D?

When it comes to advancing a claim under Section 80D, there are several restrictions that apply to term insurance coverage. Here are a few examples.

1. If you, your spouse, and your children all have critical illness term insurance and are under the age of 60, you may be eligible for a tax deduction of up to Rs 25,000.
2. If your parents are under the age of 60, you will be eligible for an extra deduction. Again, there is a maximum amount of Rs 25,000.
3. If your parents are elderly citizens (over 60 years old), you can save money on taxes by purchasing term insurance for them because the exemption amount is higher. If your parents are in this age bracket and are insured, you can claim an additional tax benefit of up to Rs 50,000 after the 2018 budget.

Conclusion

Term insurance is a pure protection plan designed to secure your loved ones' futures and ensure that the family's life goals are accomplished. You can deduct term insurance premiums from your taxes, and your nominee/family can claim exemptions on the death benefit under Sections 80C and 10(D) of the Act, respectively. In addition, the Act's Section 80D allows you to claim tax benefits for certain riders purchased to cover medical expenses related to serious diseases or impairments.

Also Read: Can You Afford Not Having a Term Insurance Plan?

Reasons Why Term Insurance is a Must Buy?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.