At the end of every financial year, we often hear people talking about tax savings and discussing financial planning. Many people make strategic investments to minimize their tax liabilities and maximize their savings. Having said that, many people are also confused between various Income Tax sections and the instruments that fall under those sections. When it comes to Term Life Insurance, you can claim tax rebates under 3 sections – Section 80C, Section 80D & Section 10(10D). Shocked? Let us find out how.
Term Insurance Tax Benefits under Section 80C
The premiums you pay towards your Term Life Insurance Policy can help you get tax deductions of up to ₹1.5 lakhs per year. But while claiming the deductions, one must remember that the sum assured of your policy should be 10 times or more than the annual premium, or else you won’t be eligible for tax rebates.
Let’s take the example of John,
If John purchases a Term Insurance policy with an annual premium of ₹25,000 then his minimum sum assured should be ₹2,50,000. If his sum assured is less than ₹2,50,000, he won’t be eligible to get any tax rebate, and his maturity amount would also be taxable.
So to avoid this, always check the above-mentioned factor.
Term Insurance Tax Benefits under Section 80D
Section 80D of Income Tax primarily deals with Health Insurance. Hence you need to be careful while claiming any tax rebates under this section. Term Insurance often comes with additional riders which are added to your basic term plan. These riders might help you claim deductions under 80D. Start by checking your term plan details. See if there are any health riders such as Critical Illness, Hospital Cash, or Surgical Care that you’ve added to your policy. If you aren’t sure about the deductions, you can ask your insurance provider what qualifies you as a health rider.
Our trained and certified insurance experts can guide you with all your queries regarding tax rebates and various insurance instruments. If you want to buy the Best Online Term Plan that helps you save tax and maximize your savings, visit MyInsuranceClub.
