As a responsible family member, you must consider your family’s future. There are too many unknowns out there. That is why a term insurance plan protects your family in case an unfortunate event happens to you.
You can check many term plans online to see what suits your needs and use the term insurance calculator to check the premium you will be paying. But we can all agree that you can’t put a price on the safety of your family’s future.
In today’s insurance market, there are so many plans out there. You must compare and carefully read all the plan details and the riders that may be offered. In this way, you can get the benefits of your term insurance plan, and your family will get the maximum benefits from your coverage. This article will show you the different income tax sections where you can claim tax benefits for getting term insurance.
Your family depends on you. Today, you are there for them. But this may not always be the case. You must ensure that even in your absence, they are well taken care of and receive all the comforts you are giving them now. Term insurance can be the perfect way to create a safety net for your family’s future.
A pure protection plan, term insurance provides coverage against an unfavourable event for the policy term. The term insurance tax benefits that come with having a term plan are one of the most significant advantages of such a plan. You can improve your savings by taking advantage of the tax benefits offered by term insurance.
Tax advantages for term insurance provided by the provisions of the Income Tax Act of 1961:
You can take advantage of several tax advantages associated with term insurance.
Below is a list of some of them:
- You may be eligible to receive term insurance tax benefits under Section 80C for the premiums you pay for your term insurance plan. This benefit can help you save money in the present. Under Section 80C, you are eligible for up to 1.5 lakh rupees in deductions.
- The tax benefits can also be extended to the death benefit awarded to the nominee. This benefit is provided by Section 10 (10D). When anything tragic happens, the policyholder’s family receives the death benefit or sum assured from the insurance policy. It ensures that the family obtains the essential financial protection it requires without the family having to pay any additional taxes.
- Tax benefit under section 10(10D) – An additional deduction of up to 25,000/- is also allowed under Section 80D on premiums paid for term plans that include a critical illness cover option.
The criteria for qualification to receive a tax advantage are as follows:
Only individuals and Hindu Undivided Families (HUFs) can claim a deduction on the benefits they receive from their term plans or the premiums they pay for their term insurance policies.
Should I cancel my term life insurance policy, and will I still be eligible for the tax benefits it provides?
You must pay the premium to take advantage of the tax breaks offered by Section 80C for term insurance. The tax benefit is calculated based on the premiums paid within a fiscal year. Your term plan will expire, and your life insurance will be cancelled if you stop paying the premiums. After this point, your nominee will no longer be eligible for any cash benefits from your policy. In addition, if you stop paying your premiums, you will no longer be eligible for deductions.
Do I need to pay the Goods and Services Tax (GST) on term insurance under section 80C?
On top of the premium amount, the Goods and Services Tax (GST) and any applicable cesses will be assessed at the applicable rates.
In this way, you can protect your family and secure their future while benefiting from tax breaks from your term insurance. The government provides a great benefit that incentivises getting life insurance, thus protecting the dependents of homes with single breadwinners. Of course, you must choose the right term insurance so the premiums do not burden your daily finances. You can use a term insurance calculator to see how much premium you will pay to ensure paying them on time without major financial strain.
We hope this article has served its purpose in educating you on the different term insurance-related tax advantages you can get from the provisions laid out in the Income Tax Act of 1961. Now you can get your insurance and save tax, too!
There are 2 tax regimes in India – new and old. Choose the correct one after consulting an expert to get the tax benefit you desire. You can opt for a regime change during the next financial year.
All savings are provided by the insurer as per the IRDAI-approved insurance plan. #hydnews #hydkhabar #livehyd