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Life Insurance 952 views November 12, 2020
Life is full of uncertainties, and you would surely not want your family to suffer financially in case something unfortunate like a death happens to you. So, what is a suitable way to be ready for such uncertainties? The answer to this question is a Life Insurance Policy that covers you and your family. Several Insurance Companies provide Life Insurance policies to individuals from different age groups. Other than ensuring a financial safety net for your loved ones in your absence, a life insurance plan can also provide several tax benefits to you.
Life Insurance Tax Benefits are available under different sections of the Income Tax Act, 1961, not only on the premium paid towards the policy but also on the maturity amount received. These tax benefits further encourage individuals to go for a Life Insurance Policy to build a better future for their families. So, what are the different Life Insurance Tax Benefits that you can enjoy? In this article, we will be telling you about each tax benefit in detail. Keep reading to know the same.
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As we said earlier, you can get tax benefits under different sections of the Income Tax Act, 1961- Section 80C, Section 80D, Section 10(10D), etc. Tax benefits will apply to the premium paid for the policy and the payout on your policy. Let’s check out the benefits of different sections one after another.
For the life insurance policies of yourself, your spouse or your dependent children, you can enjoy tax benefits on the premium amount under Section 80C of the Income Tax act. Premium paid towards a life insurance policy of an Insurance Company, which is approved by the Regulatory and Development Authority of India (IRDAI) will be eligible for tax benefits under Section 80C. Both individuals and members of the Hindu Undivided Family (HUF) can also avail of the tax benefits under Section 80C.
Keep in mind the following things while claiming Tax Benefits on Premiums paid towards Life Insurance Policies under Section 80C.
Individuals also get Life Insurance Tax Benefits under Section 10(10D) on the receipt of Insurance Payouts, whether as Sum Assured or Coverage. These payouts will be given to the nominee as a Death Benefit to the nominee or as a survival benefit to the insured person or bonuses (if any) on maturity. However, there are a few conditions when payouts will not have any tax benefits. Check out such conditions below.
Insurance Companies also provide several additional riders such as Critical Illness Rider, Surgical Care Rider, Hospital Care Rider, etc. Under Section 80D, individuals can also get tax benefits on the premium paid towards such Life Insurance Policies. On the premium paid for policies for yourself, spouse, dependent children and parents, you can enjoy such tax benefits.
We are showing some important things below regarding these tax benefits under Section 80D. Have a look!