Know About Term Insurance Plans And Their Tax Benefits
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Term insurance provides life cover to you for a certain period in return for regular payment of a specific premium. If the life assured dies during the policy period the policy nominee will receive a death benefit as defined in the policy inclusion terms.
A term insurance plan is highly affordable and you can also receive additional benefits by including add-ons in it. You should also know that pure term insurance has no cash value, i.e., it does not provide any survival benefit. However, you can get many other benefits like term insurance tax benefits, by investing in a suitable plan.
Let us take an in-depth look at the term insurance tax benefits.
List of All Term Insurance Tax Benefits
This is a list of the term insurance tax benefits:
Section 80C
The most basic term insurance tax benefits that any Indian taxpayer can avail fall under the purview of Section 80C of the Income Tax Act, 1961. In fact, many people think of this Section as the most popular tax saving tool. Under this section, you can get term insurance tax benefits up to Rs 1.5lakhs for the premium paid for buying the plans. An aspect that you should know about is that the upper limit of tax deductions available under this Section also includes tax benefits on investments in the Public Provident Fund (PPF), tax saving fixed deposits, and several other tax-saving instruments. You can maximize term life insurance tax benefits by investing in a substantial life cover for yourself and benefit your family members in the long run.
Section 80D
Section 80D mainly allows tax deductions on the premiums paid for health insurance. However, it also provides term insurance tax benefits through an indirect manner. You can avail of term insurance tax benefits under 80D if you have opted for health-related riders, like Critical Illness cover, Surgical Care cover, and similar others. In other words, you can maximize tax savings with your term insurance premiums by opting for these riders while also getting health insurance cover.
Section 10 (10D)
Other than the term insurance tax benefits that the life insured can avail, the life assured and their family members can also save money with tax exemptions. This is covered under Section 10 (10D). The death benefit or the maturity benefit received under the tax insurance policy is tax-exempt. This is also subjected to various conditions provided therein. These term insurance tax benefits have no upper limit. It means the entire amount that you and your loved ones will receive under the term plan is exempted from taxes. You should know that the term insurance tax benefit under Section 10 (10D) is also subject to certain conditions. It stated that the maturity or death benefits under a term plan are non-taxable if the premium payable during the policy period does not exceed 20% of the predefined sum assured.
Conclusion
For every individual, saving money is a crucial aspect of life. Particularly when it is about saving taxes, every individual looks for ways to reduce tax liability. There are various aspects related to term insurance in income tax that you should have. This article is particularly for that purpose.
Also read: Learn About The Various Types Of Fixed Deposits In India
