2022-08-07
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A life insurance policy is usually the first investment made by a person when they begin working and earning for themselves. Everybody wants to ensure their protection as well as protection for their loved ones in case something happens to them, and a life insurance policy is usually the best way of guaranteeing that protection.
A life insurance policy has a range of benefits, the most important being that it ensures your family and dependents can continue their standard of living even if you are no longer around to provide for it. You can choose from a variety of situations, and ensure that your policy remains equipped to deal with it regardless of the situation that may befall you. You can also choose to have the entire sum assured paid out to your dependents as a lump sum amount or in installments as a form of income.
You can opt for the iSelect Smart360 Term Plan, available on Canara HSBC, which allows you to customise your insurance policy according to your requirements at very cost-effective premium rates. Both coverage and terms of premium payments can be customised according to your personal needs.
One major reason that life insurance policies continue to be one of the most sought-after investment instruments are the tax benefits available with them. Life insurance tax benefits cover some of the best tax provisions available under the Income Tax Act, 1961. Read on below to learn more about life insurance tax benefits and the relevant sections pertaining to them.
1. Section 80C:
This section specifically talks about tax provisions available on the premiums paid by the policyholder towards their insurance policies. Section 80C allows for tax exemptions on premiums paid towards life insurance policies. Since total deductions up to Rs. 1.5 lakh are allowed under this Section, this is one of the best life insurance tax benefits available to policyholders. However, for claiming this benefit, you need to ensure that your premium amount is not more than 10% of the total sum assured offered by the policy. For instance, if the sum assured of your policy is Rs. 10 lakh, you need to be paying up to Rs. 1 lakh in order to avail this benefit under Section 80C. For maximum benefits, you should consider investing in the iSelect Smart360 Term Plan, available on Canara HSBC. Not only will you be eligible for tax benefits, but you also receive a range of other benefits including the option to add your spouse at a discounted premium rate to the same policy.
2. Section 10(10D)
Section 10(10D) of the Income Tax Act, 1961 pertains to the benefits received through a life insurance policy. Since there are no maximum limits to this benefit, any amount received under this Section is completely exempt from taxation. Additionally, this benefit could be anything ranging from death benefit to maturity benefit or even the benefit received for surrendering the policy. However, if you choose to surrender your insurance policy, there are a few other things you should keep in mind.
a. The surrender benefit is exempted from taxation only if the policy is surrendered after the completion of 2 years. This is valid on traditional life insurance plans with a single premium.
b. With a regular premium policy, you are eligible for tax exemption on the surrender benefit only if the premiums have been paid for a total of 2 years.
c. If you have opted for a Unit Linked Insurance Plan (ULIP), you can only surrender the policy after the 5-year lock in period has been completed to receive the tax benefits
3. Section 10(10A):
This section of the Income Tax Act, 1961 relates specifically to pension plans, whether as part of a traditional life insurance policy or as a ULIP. Since your pension plan allows you to withdraw a third of the corpus for vesting purposes, this portion becomes tax-free owing to Section 10(10A). Since the rest of the corpus is paid in the form of annuity, these are not tax-free.
4. Section 80CCC
Section 80CCC also relates to pensioners, and more specifically, to the premiums paid towards the pension or annuity plan. Under this Section, the premiums paid are exempted from taxation up to a maximum limit of Rs. 1.5 lakh, but it also includes the benefits under Section 80C. Thus, if you are paying premiums towards a pension plan, your maximum limit of tax exemption is capped at Rs. 1.5 lakh, combining both Sections.
Life insurance tax benefits are only one of the reasons why these policies are the most sought-after investment instrument. With the iSelect Smart360 Term Plan, available on Canara HSBC Life Insurance, you can avail a range of other benefits including customised plans wherein you can decide your frequency of premium payments as well as the manner in which the sum assured will be paid to your nominees.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
Tax Savings - Top Selling Plans
We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.
Family Shield: Enhanced Protection
iSelect Smart360 Term Plan
- 3 Plan options
- Life cover till 99 years
- Steady income benefit
- Block your premium at inception
Fixed Returns, Zero Risks & Worries
iSelect Guaranteed Future Plus
- 4 Plan options
- Life cover + Guaranteed benefits
- Accidental death benefit
- Premium protection cover
Start Young, Pay Less, Stay Secured
Young Term Plan
- Life cover till 99 years
- Coverage for spouse
- Block your premium rate
- Covers 40 critical illness
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