Life insurance plan is an essential tool for ensuring a financially secure and comfortable future for your loved ones. Besides providing capital benefits, life insurance also offers tax-saving advantages. Under Section 80C and 10D of the Income Tax Act, you can avail of tax deductions on the premiums paid towards a life insurance plan. These benefits allow you to save on taxes while providing financial security for your family.
When it comes to life insurance, it’s important to understand the various features and benefits it offers. In this article, you will explore the various features of life insurance and how it can help you save on taxes.
Here are the key aspects of understanding the benefits or features of life insurance for tax savings:
Section 80C of the Income Tax Act allows individuals to claim deductions on premiums paid towards life insurance policies. You can claim a deduction of up to Rs. 1.5 lakh on the premiums paid towards your life insurance policy.
The deductions are applicable for policies issued before 31st March 2012 if the premium paid in a financial year is 20% of the sum assured amount. For policies issued after 1st April 2012, the deductions are applicable if the premium paid in a financial year is at least 10% of the sum assured.
Section 10(10D) of the Income Tax Act exempts the maturity amount received from a life insurance policy from tax. The sum assured amount plus any bonuses paid on surrender or maturity of the policy is entirely tax-free. The exemption also applies to gains and proceeds from unit-linked insurance plans (ULIPs) if the premium paid towards the policy is not more than 10% of the sum assured amount. If the maturity proceeds exceed Rs.1 lakh, a tax deduction at source (TDS) of 1% will be applied by the insurer if the PAN of the policyholder is available.
Here are some of the key benefits of the life insurance plan for tax savings:
Life insurance plans provide a dual benefit by offering financial protection to your family in case of your unfortunate demise and helping you save taxes. You not only secure your loved ones’ future but also lower your tax liability by investing in a life insurance plan
Investing in a life insurance plan is like having a safety net that protects your family’s financial well-being while also giving you peace of mind knowing that their future is secure even in your absence.
One of the significant advantages of life insurance plans is that you can claim deductions on the premiums paid towards them under Section 80C of the Income Tax Act. This reduces your taxable income and ultimately lowers your tax liability.
Under Section 10(10D), the maturity amount received from a life insurance policy is entirely tax-free. This means that any bonuses or proceeds you receive on surrender or maturity of the policy are exempt from taxation.
Imagine you are a young working professional starting your career and planning for financial stability in the long run. You not only protect your loved ones’ future but also avail of tax benefits that help you meet your financial goals by investing in a life insurance plan early on. You not only secure your family’s future but also create a financially stable foundation for yourself by taking advantage of these tax benefits.
Apart from life insurance, health insurance policies also offer tax benefits under Section 80D of the Income Tax Act. Here are the deductions available:
Life insurance plans offer numerous benefits, including tax savings, financial protection, and long-term savings. You can make informed decisions while choosing a life insurance plan that suits your needs by understanding the various tax benefits available under Section 80C and 10(10D). Remember to consult with a financial advisor to determine the best plan for your specific requirements and goals.
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