Tax Benefits to consider while buying a Life Insurance policy
Tax Benefits to consider while buying a Life Insurance policy
While buying a life insurance policy one should look for the plan which gives double tax benefit as below:
(I) Under section 80 C
The policy should have section 80 C tax benefit. Under this section, customers get the tax rebate equal to the amount of premium paid in a financial year subject to following conditions:- Amount of premium paid in a financial year is not more than 10% of the total sum assured of that insurance policy. i.e if sum assured of an insurance policy is Rs 2 Lakhs, the annual premium eligible for tax rebate u/s 80 C cannot be more than Rs 20 Thousand.
- Total exemption under section 80 C is within the permissible limit of Rs 1 Lakhs.
(II) Under section 10 D
Under this section, customers get the tax free maturity amount. If section 10 D tax benefit is not the part of an insurance policy then the maturity amount is clubbed with other incomes of the beneficiary in that year. He/She will therefore pay the taxes prevailing at that time.
Conclusion:
2. Before buying a policy always check that the policy gives tax free maturity under section 10 D.
