What Are Money Back Plan Tax Benefits?
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Each of the investment vehicles offers numerous benefits individually. However, you may invest in a plan that offers the combined advantages of both insurance coverage and returns.
One such plan is a money back policy. Such policies not only offer an insurance cover but also allow you to enjoy returns at regular intervals. These insurance plans protect your family in case of your sudden demise or if you are diagnosed with critical illness. Besides, such policies provide you with periodic payouts, which help you to meet your financial commitments.
Let us take an in-depth look at the money back tax benefits.
List of All Money Back Plan Tax Benefits
This is a list of the money back policy tax benefits:
Section 80C
The most basic money back plan 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 money back plan tax benefits upto 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 deduction available under this Section also includes tax benefits on investments in 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 money back plan tax benefits through an indirect manner. You can avail money back plan 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 money back plan premiums by opting for these riders while also getting health insurance cover.
Section 10 (10D)
Other than the money back plan tax benefits that the life insured can avail, 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 money back plan tax benefits have no upper limit. It means the entire amount that you and your loved ones will receive under the money back plan is exempted from taxes. You should know that the money back plan tax benefit under Section 10 (10D) is also subject to certain conditions. It stated that the maturity or death benefits under a money back plan is non-taxable if the premium payable during the policy period does not exceed 20% of the predefined sum assured.
Wrapping Up
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 money back plans in income tax that you should have. This article is particularly for that purpose.
Also read: Factors Influencing Money Back Plan Premium
