The premiums are not taxed under Section 80C and 80D. So, buying the best term insurance plan early and adding riders is a good idea. Taxpayers can save by buying term plans due to the general term insurance tax benefit 80D deductions. It is a financial instrument that not only gives tax benefits to taxpayers but also provides life coverage. It is both cost-effective and profitable.
Policyholders often inquire, "Is a term insurance plan tax-free?" “Is a term insurance taxable" and "Do we get a tax reduction for term insurance plans?"
The answer to these questions is yes, all term insurance policyholders are eligible for deductions, and they are tax-free.
Also, people ask questions like, "Does term insurance fall under 80C or 80D?" Policyholders will be liable for tax benefits.
1. Section 80C
The most basic term insurance tax benefits are available under this section of the Income Tax Act of 1961. It's frequently misunderstood as a tax avoidance tool. Taxpayers can claim deductions under Section 80C of the 1961 Income Tax Act.
For payments on life insurance premiums under this section, a person's maximum liability in a financial year is 1,50,000.
2. Section 80D
Policyholders are liable for term insurance tax benefits under section 80D in case they suffer from any critical illness. Others can be eligible for tax benefits without any illness. Under this deduction, policyholders are given an option to cover spouse, children (dependent), and parents.