Life insurance is a much sought after asset for most individuals, since it is the ideal solution for taking care of your dependents when you are no longer around. It offers great peace of mind as it allows your loved ones to remain financially secure and assured that they will be looked after in your absence.
Life insurance policies are structured differently, depending on the individual requirements of the customer. While some are straightforward term plans, others involve provisions for the return of premium as well as investment components to generate wealth.
One of the major reasons that life insurance policies are popular is owing to the wide range of benefits they offer while the policyholder is still alive. The biggest benefit offered by life insurance policies to policyholders revolve around the tax benefits applicable on the policy.
Tax benefits are available to policyholders under three sections of the Income Tax Act 1961, namely, Sections 80C, 10(10D) and 80D. Read on to learn about how these Sections are beneficial to persons buying life insurance policies.
1. Tax Benefits Under Section 80C of the Income Tax Act:
Tax benefits are available on premiums paid towards life insurance policies under Section 80C of the Income Tax Act. The Section allows for tax exemptions up to Rs. 1.5 lakh per annum.
The tax benefit is available on premiums paid towards life insurance policies for yourself, your spouse and any dependent children.
All the tax benefits applicable to individual policyholders are also available to members of Hindu Undivided Families (HUFs). However, there are a few things to be kept in mind while opting for life insurance policies in order to avail tax benefits under Section 80C of the Income Tax Act.
2. Tax Deductions Under Section 10 (10D) of the Income Tax Act:
Tax exemptions are available under Section 10(10D) of the Income Tax Act on the payouts made to policyholders of life insurance on reaching maturity as a survival benefit. This is also applicable when the sum assured is paid out to the policyholder’s nominee as a death benefit. However, there are several considerations to be taken into account for tax exemptions under Section 10(10D) of the Income Tax Act.
3. Tax Benefits under Section 80D:
It is possible to claim tax deductions on health insurance premiums and even for life insurance policies that offer additional health cover. For instance, those opting for riders such as Critical Illness Riders, Hospital Care Riders, Surgical Care Riders etc. can avail of deductions under Section 80D. It is possible to claim these deductions on insurance policies availed for self, spouse, children dependent on the policyholder and also your parents regardless of whether they are dependent on you or not. The tax benefits, aside from being available to individuals, can also be availed by members of Hindu Undivided Families (HUFs).
However, there are a few considerations to be kept in mind regarding tax benefits available under this Section.
These are the different tax benefits available to individuals paying premiums on life insurance policies. Tax benefits are a major reason why life insurance makes for a good investment instrument, both while the policyholder is alive and even after their death. Opt for the iSelect Star Plan, available on Canara HSBC Oriental Bank of Commerce, to avail of these tax benefits along with a host of other benefits including the flexibility to choose how payouts are to be paid to dependents. The iSelect Star Plan also offers lucrative features such as the ability to add spouses within the same insurance policy. Policyholders can also choose from a wide variety of payout options for their nominees, allowing for customisation of the plan in line with the policyholder’s individual requirements.