Term Insurance Tax Benefits

Despite your hard work to achieve your dreams and take care of your family, you watch your money slip due to taxes when the year ends.

There are many methods to reduce taxes through various sections of the Income Tax Act. Out of all the choices you have, term insurance is a useful method for saving taxes. It provides protection for your family from financial difficulties in the event of your passing. This pure protection plan offers various advantages, including life coverage, death benefit, peace of mind, and tax advantages.

The Income Tax Act is a legal framework that regulates taxation of individuals, businesses, and other entities in India. The Act lays down rules and regulations for filing tax returns, paying taxes, and claiming tax deductions and exemptions. The Act is regularly updated with amendments and changes to keep pace with the evolving economic and social conditions of the country. 

The Income Tax Act is a comprehensive law that governs income tax in India. It is divided into several sections, each dealing with a specific aspect of taxation.

Did you know that term insurance offers three tax benefits? Let's understand them and see how they can help you save money and secure your financial future.

Section 80C of the Income Tax Act allows individual taxpayers to save on taxes by offering deductions for investments and expenses made during a financial year, with a maximum deduction limit of Rs. 1.5 lakh.

Eligible investments and expenses under this section include the following.

Section 80C of the Income Tax Act provides tax benefits on specific investments and expenses, subject to eligibility criteria. To be eligible for tax benefits under Section 80C, an individual must be a taxpayer in India, either a resident or a non-resident.

The following individuals can claim deductions under Section 80C.

Section 10(10D) of the Income Tax Act states that the money the designated person receives upon the policyholder's death is tax-free. Additionally, the sum assured upon maturity is also tax-free. However, this exemption applies if certain conditions are met:

Although Section 80D of the Income Tax Act primarily allows tax deductions on premiums paid for health insurance policies, term insurance policyholders with Critical Illness cover, Surgical Care cover, and other similar covers can save up to ₹ 25000 on premiums paid. The deduction limit for senior citizens' parents is increased to ₹50,000.

You can opt for ACKO Life Critical Illness Benefit Rider to add more protection for your term insurance. The rider covers 21 critical illnesses, including life-threatening common illnesses among women, such as breast cancer, cervical cancer, fallopian cancer and ovarian cancer.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.