In today’s fast-paced world, life is becoming more uncertain and more people are investing in their families’ financial protection. Multiple financial tools are available to add an extra layer of security for a better future.
One popular financial tool is a term insurance plan. This is an easy-to-understand, affordable life insurance policy that provides death protection to the policyholder’s family.
You can use our term insurance premium calculator to compare different plans, decide which one best suits your requirements, and then buy it online. However, many people still do not know the various tax implications of term plans.
To help you make informed decisions about period planning, we will discuss the following points: Tax benefits for term insurance In this blog.
What is a recurring plan?
A term plan is a life insurance plan that provides a death benefit to the insured’s family in the event of the policyholder’s sudden death. This is a pure guarantee type of whole life insurance, and the benefit is only effective after the death of the insured.
There is no investment or savings aspect to the basic plan. However, some term plans offer a premium return for add-on feature guarantees in which the policyholder receives the sum of the premiums paid if the policyholder survives the policy term.
Additionally, you can take advantage of multiple special benefits to increase the overall value of your term plan. Additional rider benefits are an additional cost, but the cumulative cost to the policyholder is affordable compared to the benefits they receive.
There is no age limit to enjoy the benefits of a regular plan. Age and health are the two main factors that affect premiums, so starting as early as possible will further reduce your premium amount. You can also change the recipient if necessary.
List of tax implications for term plans
1. Under Section 10 (10D)
Insurance proceeds received by the policyholder’s family or beneficiaries are exempt from tax under the Income Tax Act. Maturity benefit payments may also be tax exempt if applicable according to the plan and current state regulations.
2. Under section 80C
Residents or non-residents of India can benefit from tax-free premium payments on term plans up to ₹1.5 million per year. This exemption only applies if the premium paid is up to 10% of the term plan sum assured. In case of disabled or seriously ill patients, 15% of the total sum assured is waived up to Rs 1.5 million per annum.
3. Under section 80D
Similar to Article 10 (10D), the amount claimed is exempt from tax. Under Section 80D, tax benefits are available for health-related insurance contracts. For example, if the policyholder opts for additional rider benefits such as critical illness, a tax deduction of up to ₹25,000 may be available if she is below 60 years of age. If the policyholder is above her 60 years of age, this limit may increase up to ₹50,000. .
conclusion
To improve your financial future, we recommend investing in a term plan. Term plans provide coverage specifically to provide financial protection to your family in your absence.
However, you should also always be aware of any tax implications that apply to your term insurance payments. These tax implications are revised from time to time, so stay informed and make the right decision.