ALL >> Insurance >> View Article
4 Tax Benefits On Life Insurances You Must Know About
Buying a life insurance policy is a must whether you have dependents or not. Whether you have your spouse and children who are dependent on your income or you are all alone enjoying your life, having a cover is essential. There’s no two ways about it. But while you choose a plan, you also need to consider the many benefits it offers.
Below are four tax benefits of a cover you must know about.
Deduction under Section 80C
The premium amount you pay on the coverage for yourself, your spouse or your child will be eligible for a deduction under Section 80C of the Income Tax Act. An individual and a HUF (Hindu Undivided Family) can claim this deduction and it is allowed regardless of your child being independent or dependent, married or unmarried, minor or major. In order to claim this deduction, the premium amount paid should not be more than 10% of the sum assured if the policy is issued after 1st April 2012. If the policy is issued before 1st April 2012, the premium paid should not be more than 20% of the sum assured.
Exemption under Section 10 (10D)
This section of the Income Tax Act deals with the maturity amount received. If the premium amount paid on your life insurance does not exceed 10% of the sum assured on the policy issued after 1st April 2012 and 20% of the sum assured on policies issued before 1st April 2012, the amount received on the maturity of the policy or any amount received as a bonus is fully exempt from Income Tax under Section 10 (10D). There is no cap on the extent of tax-free income received at the time of maturity. However, if the premium paid on the policy is more than 10% of the sum assured or 20%, of the sum assured, the maturity benefits will be fully taxable. If you want to avoid paying tax on maturity claims, you need to be careful at the time of purchasing the cover. You need to ensure that the sum assured on your cover is more than ten times the annual premium you pay for it.
TDS on insurance policy
If the amount received from a life insurance policy is more than Rs. 1,00,000 then it is not covered under the exemption of Section 10 (10D). In this case, there will be a TDS @ 1% deducted by the insurer before making the payment. It will also be deducted on bonus payments. However, in case the amount received is less than Rs. 1,00,000, there will be no TDS on the amount. If the TDS is deducted, you may claim a credit for the same in your Income Tax Return.
Tax exemption under Section 80CCC
This benefit is provided to those who pay a premium under the annuity plan that guarantees a pension payment at a later stage. This benefit can be availed by individuals and HUF. The maximum amount of deduction that can be claimed under this section is Rs. 1,50,000.
So, now that you know about the tax benefits of a life insurance, hope you can make a well-informed decision on your purchase.
Insurance Articles1. Scenario To Help You Understand The Importance Of Piccolo Insurance
Author: Keith dibble
2. The Reasons Why Music Shop Owners Should Buy Music Dealer Insurance S
Author: Keith dibble
3. Insureatoasis - Easy | Quick | Secure
Author: Oasis Insurance
4. Health Insurance Request Quote Sharjah
Author: Go Finance
5. Fiddle Instrument Insurance – Ways It Can Protect You Financially
6. Get The Clarinet Insurance From The Best Provider
7. An Insight Of Insurance For Retailers Before Starting Your Music Store
8. Specialized Insurance For Musical Instruments Vs. Homeowner’s Insurance
9. Benefits Of String Instrument Insurance And Its Coverage
10. Tips To Choose Music Insurance Company For Instrument Coverage
11. Music Teacher Insurance - A Benchmark Of Professionalism!
12. Do You Need The Advantages Of Term Life Insurance?
Author: Active Capital Reinsurance Ltd
13. Things To Keep In Mind While Buying Oboe Insurance
14. Brass Musical Instrument Insurance And Maintenance Are Two Pillars For Your Gear!
Author: Musical Instrument Insurance
15. Your Online Security Is Our Responsibility!
Author: SOC Assurance