Life insurance is one such product that people tend to buy normally for their incidental benefit than its basic purpose. It is similar to buying a car for depreciation benefits or a mortgage for tax benefits. The tax benefits that insurance policy offers is primarily becoming a major center of attraction. However, the major concern or objective of life insurance plans is that they provide a strong financial backup to your family in case of tight situations in life. Hence, depending on the requirement and budget, one should purchase an insurance policy for better future and not merely for tax benefits.
One may wonder, why an insurance policy is often sold as a tax planning product in the month of Jan-Feb- Mar? The answer is that it is the easiest sales pitch for many dishonest agent. And, who does not like to save tax? Moreover, it is one of the most convenient option that insurance companies offer.
Tax benefits are indeed helpful in life insurance products when compared to other financial products. Here, you save tax on both, the premium paid and also on the number of benefits received on maturity or death.
The insurance premium paid towards the insurance policy can be minimized from your taxable income, thereby lowering your complete tax liability- • You get a tax exemption up to Rs 1 lakh per financial year under section 80C of the income tax 1961 for the life insurance premium for yourself, your spouse or your children. This holds true for the premium paid in a financial year for a policy is less than 20 percent of the actual capital sum assured. • One can claim a tax deduction on premium paid to purchase a retirement plan from a good life insurance company in order to receive pension from retirement under section 80CCC. The tax deduction feasible is the premium paid or Rs. 1 lakh which is lower. • Under section 80D, one can claim tax deduction on premium paid for health insurance plan for yourself, your spouse, your parents or children who are dependent on you. • The amount of tax deduction is limited to Rs. 15,000 or the actual premium you pay, whichever is lower in case of premium paid on behalf of yourself, your spouse or children.
Amount available either at the end of the policy or on death of the policy holder is exempt from tax under section of 10D, subject to a few exemptions.
Registered office: AEGON Religare Life Insurance, 2nd Floor, Paranjpe B Scheme, Subhash Road, Near Garware House, Vile Parle (E), Mumbai - 400 057 Call 1800 209 9090 SMS GUARANTEE to 56677 Website - www.aegonreligare.com Centers spread across 118 cities in India.