Saving money is among the most crucial aspects of an individual. Specifically, when it comes to saving taxes, every person tends to find ways in which they can decrease tax liability. You have a choice of buying a term insurance plan to availing of a term insurance tax benefit. Besides opting for the cover for life, you are also eligible for availing of the benefits of taxes. Nonetheless, there are a number of aspects that are associated with these benefits in income tax that you must be well-acquainted with.
Firstly, what is a term insurance plan?
Among the simplest kinds of life insurance policies, term insurance offers life cover to the policyholder for a specific tenure in return for constant payments of a certain premium. In common words, if the individual decreases during this period, the nominee will be eligible for obtaining a benefit of death based on the inclusion terms of the policy.
Term insurance tax benefit
Firstly, there are deductions according to Section 80C, which means that you are likely to get deductions of a maximum of 1.5 lakh rupees under this section. You must note that this section consists of deductions associated with investments such as NSC (National Savings Certificate), FDs (tax-saver fixed deposits, and PPF (Public Provident Fund) and also the repayment of the principal of the home loan. You may focus on deductions on the premiums paid for term insurance annually for your family as well as yourself based on section 80C.
Another term insurance tax benefit is based on section 10D. Whenever the family of a policyholder gets the benefit of death or the amount that is assured according to the demise, the money obtained is exempted under section 10 (10D) based on the conditions mentioned.
Lastly, section 80D provides a deduction on the insurance of health premiums that are paid annually for children, spouse or for the self of a maximum of 25,000 rupees. One is eligible for a tax deduction of a maximum of 50,000 rupees in case the assurance of life is more than 60 years. A similar rule is applicable in the case when the premiums are paid for the parents as well. A deduction of a maximum of 5,000 rupees is permitted on medical check-up that is preventative within the pre-defined limit.
Other than term insurance tax benefit, these plans help in securing the family over a period by aiding them to enjoy the advantages associated with substantially lower premiums that are affordable. You do not only get to have the yearly benefits of tax but also the final benefit of death and is a non-taxable subject based on the Income Tax Act. This helps us a major measure for the family’s security and allows you to be at peace considering your financial dependents.
The Bottom Line
Term insurance tax benefits are among the major ways of saving taxes. You can get the benefits apart from getting to secure your family after the unavoidable death.