To save on tax, a variety of deductions and exemptions are available under the numerous sections of the ITA (Income Tax Act). Taxpayers can invest in a wide variety of instruments that qualify for these deductions and exemptions. The deadline to invest in tax-saving instruments is March 31st, 2020.
One such tax-saving instrument is term insurance. Apart from availing the term insurance tax benefit, policyholders also get a secure life cover for their family and can remain stress-free in the long run.
A term insurance plan, as the name goes, is an insurance plan for a specified term. It offers you a large sum assured at a relatively low premium rate. If the policyholder passes away during the policy term, the sum assured is payable to their nominee.
Term insurance income tax benefits
Term insurance income tax benefit under Section 80C
Conditions for term insurance tax benefit under Section 80C
Term insurance tax exemption under Section 10(10D)
As per Section 10(10D) of the Income Tax Act, the sum assured received on maturity or surrender of a policy or upon the policyholder’s death is completely tax-free.
Bonuses received with such amount are also exempt under Section 10(10D).
Conditions for term insurance tax exemption under Section 10(10D)
Term plan tax benefit under Section 10(10D) is applicable if the premium is less than 10 percent of the sum assured or the sum assured is at least 10 times the premium.
If the payout exceeds Rs.1,00,000, and the policyholder’s PAN is available to the insurer, a TDS (Tax Deducted at Source) of 1% is applied.
Term insurance tax benefit 80D
Traditionally, Section is reserved only for health insurance policies. If offers a deduction on health insurance policies taken for self, spouse, children, or parents with different deduction limits under different conditions.
However, certain term plans can also avail the tax benefits under Section 80D. Policyholders who have opted for a health-related rider (such as Critical Illness, Surgical Care, Hospital Care Rider) with their term insurance policy, can also avail deductions.
Conditions for term insurance benefit 80D
In order to avail all the tax benefits that come with a term plan,Canara HSBC Oriental Bank of Commerce’s iSelect+ Term Plan proves to be a lucrative option. Policyholders can take their pick of the various riders available - Accidental Death Benefit, Accidental Total and Permanent Disability Benefit or even the Child Support Benefit. They can also customize their payout options and choose to receive their payout in the form of a lump sum, a monthly income or a part lump sum-part monthly income. They choose from 3 plan variants, which, each, offer unique benefits like return of premiums, spousal cover and more. Thus, in addition to tax benefits, policyholders can benefit from a whole bunch of advantages by opting for a term plan.
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