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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:


  1. 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.
  2. 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: 


1. It is always advisable to take a regular premium policy rather than a single premium policy. It is because you will not get the complete tax benefit in single premium policies since it's premium is always higher than 10% of the sum assured.


2. Before buying a policy always check that the policy gives tax free maturity under section 10 D.






*** To buy a new LIC policy call Vikas 99111-70785 *** 


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