Life Insurance Tax Benefits | Major Tax Benefits & How To Claim Them
Life Insurance Tax Benefits
It is well known that life insurance is a best investment option as well as tax saving option. Government has specify some sections especially for Life Insurance Tax Benefits like as Section 80C, Section 80DD, Section 80D, and Section 80CCC. You can claim for tax benefit as per terms of these sections. As an insurer you must know How to claim life insurance. Life insurance major tax benefits are mentioned on this article. So have a glance below.
Investing money in life insurance is a great option as it provides security to your family and kids after the insurer death. The main objective of the life insurance is to provide financial protection. If you invest surplus amount in life insurance, endowment or a retirement plan, premium amount will deduct from the taxable income per annum.
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Life Insurance Tax Benefits
Under Section 80C
- Both individuals as well as Hindu Undivided Families (HUF) are eligible to take avail of tax deduction.
- Under section 80C, section 80CC and section 80CCE, the maximum deduction is allow Rs.1,50,000.
- If the insure paid his premiums in specific financial year which is excess of 20% of the actual Sum Assured then this section consent Premiums up to 20% of the Sum Assured.
- Tax deductions are only allowable those police which are issued on or after the 1st of April, 2012 but there is one more condition i.e. the premiums payable will not more than 10% of the actual capital Sum Assured.
- If the insurer claim under this section or terminates his policy within 2 years from the date of purchase the policy, the benefit will be reversed.
- If the insurer terminates his policy within 5 years from the date of purchase or claim under this section, the benefit will be reversed in that condition.
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Under Section 80DD
This section is deals for disabled dependants, they can claim under this section.
- For disabled dependants are eligible to be claim for tax deductions up to Rs.50,000 annually.
- For disabled dependants with severe disabilities are accountable to be claim for deductions up to Rs.75,000 annually.
- Both individuals and Hindu Undivided Families (HUF) can acquire this tax benefit.
- Under Section 80D, the qualifying amounts are:
- For individual, spouse, and children: Up to Rs.25,000.
- For guardian: An additional Rs.25,000.
- Those guardian who are senior citizens: Rs.30,000.
- Within the prearranged limit, taxes are only allowable on preventative health check-ups of Rs.5,000.
- If someone, age is over than 80, has no insurance policy but his expenditure of medical checkup and medicines up to Rs.30,000,he can also claim for tax deduction.
Under Section 80CCC
- Under this section, if the tax payer is paying premiums pension schemes like as LIC’s New Jeevan Suraksha, he is accountable for tax deduction
- Section 80CCC is specially designed for individual tax payer. This means spouse or kids are not eligible to claim under this section.
- The aggregate amount most not exceed Rs.1,00,000 under Section 80C, Section 80CCC and Section 80CCD.
Under section 10 (10D)
It is most convenient section as it deals any amount received under a life insurance policy. It covers following benefits
- Survival benefit
- Maturity benefit
- Surrender Value.
- Death benefit, etc
- Pay-outs on annuity or pension plans
- Insurance policies for disabled dependents
Under this section there are some cases exempted which are presented here.
- Under this section no cap on maximum deduction is allowed.
- If the Policies bought sorcerer between the 1st of April 2003 and the 31st of March 2012, premium in any year is more than 20% of the Sum Insured.
- If the insurer has bought Policies after 1st April 2012, the premium in any year is more than 10% of the Sum Insured.
- Under Section 80DDB for disabled people, purchased the policy after 1st April 2013 and the premiums on these policies are more than 15% of the Sum Assured.
- The conditions above do not apply to death claims, or any amount received on the death of the life insured.
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We have presented almost section under which you can claim for tax deduction. Before purchasing any insurance policy customer needs to check tax saving opportunities as well as all terms and conditions. Check the agreement before signing on any document if you don’t want to see unaccepted surprise or hidden charges.
Assume if you purchased any policy and premium is below than specified limits during the tenure of the policy what you will you do? There are few insurance policies are present in the market which possess low specified limits. Those policies are taxable and don’t comes under death claim. So be careful on signing on any documents.