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The deadline for tax filing is approaching, and people have already started exploring various tax saving instruments that fulfil their tax-saving needs. Though there are several options available in the market to invest and save taxes with, term life insurance has remained the topmost choice in both pre and post GST era. The insurance cover is a product the has the dual benefits of ensuring life coverage for the life insured and helps you save a considerable amount in terms of taxes.
Top 3 reasons why term insurance is a favourable tax-saving instrument:
1. Benefits under Section 80C
Almost all the taxpayers are familiar with the benefits of Section 80C well. Instruments falling under this section offer deductions on the premiums paid by policyholders of up to ₹1.5 lakhs per annum. The benefits under section 80C are also applicable to the premium paid for term life insurance of spouse and children. Hence, you avail the dual benefit of securing the family and help you save on the taxes.
2. Benefits under Section 80D
The awareness for benefits under Section 80D is increasing by the day. This section allows deductions under the head ‘Medical Insurance Premium Payment’. When you buy riders along with your term plan like critical illness, disease, and disability, surgical cover, etc., you need to pay an extra premium for that. Under Section 80D, you can claim benefit over the rider premium as well of up to ₹25,000 for self, spouse, and children. The benefits on premium payment under section 80D for a senior citizen can be claimed for an amount up to ₹50,000.
3. Benefits under Section 10 (10D)
Conclusion
The benefits under section 10(10D) are applicable to the maturity amount received. In case of a mishap to the policyholder within the defined policy tenure, the benefit received by the nominees which are inclusive of the bonus (if any) is exempted from the taxes. However, this benefit does not hold true if the benefit is received under Section 80 DDA (3) or Section 80DD (3) or if the Keyman Insurance Policy scheme is applicable to the amount received.Though term insurances are critical to ensure your well-being, they are a crucial part of your financial plan and help in tax-saving to a great extent.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.