Term insurance provides you and your loved ones with financial stability and safety so you may achieve your goals in life despite all the challenges that come your way. A major portion of your income is always taxed and hence, the amount to spend in hand reduces. However, if you buy term insurance plans, then you could build a secure financial future for your family and avail tax benefits too. Term insurance is one of the tax-saving tools. In addition to receiving the tax benefits, the policyholders also receive a reliable life insurance policy for their family, which allows them to eventually relax stress-free.
What Is a Term Insurance Plan?
Term insurance plans are pure protection plans that, in exchange for a fixed premium, are effective for a set time period or duration. The nominee will be given the death benefit, whether it be a lump sum payment or monthly instalments, in the terrible event that the insured person passes away during the term. This implies that your family may carry on living their normal lives in your absence and achieving all of their objectives. Additionally, term insurance ensures the financial security of your loved ones. The family fortune and savings would have been wiped out in the absence of a term insurance plan due to the loss of income.
Section 80 D Of ITC
A policyholder may benefit from tax benefits under several portions of the Indian government’s income tax legislation. According to income tax rules, the policyholder may deduct up to Rs. 1 lakh in taxes each year for premiums paid. Furthermore, the policyholder is immune from deductions under the income tax legislation for death benefits received under the term insurance; however, the sum insured must be greater than the yearly premium paid.
The owner of a term insurance policy is eligible for section 80D tax advantages. If the policyholder purchased a term insurance plan with health riders, he or she may deduct the premium for those riders under Section 80D but must deduct the balance of the premium under other provisions of the Income Tax Act.
Claiming Tax Deductions Under 80 D
There are riders available for term plans, which are incorporated within your basic term plan. These add-ons make it easier for you to collect the 80 D tax advantages. Term insurance benefits may be claimed by the insured when filing tax returns for Section 80D deductions at the conclusion of each evaluation year. If the policyholder chose a health rider such as a critical illness, hospital cash, or surgical care rider in addition to their term insurance, they can additionally claim deductions under section 80D.
Conditions for which the policyholder has to keep in mind while making claims under the section 80 D are as follows:
- The policyholder may qualify for the tax deduction of up to Rs. 25000 if they choose a critical illness term plan for themselves and their families and are under the age of 60.
- If the insured’s parents are older than 60 and the policyholder chose comparable and separate term insurance for them, the insured is qualified for a tax deduction of up to Rs. 50,000.
Conclusion
Term insurance is a pure protection plan designed to safeguard your loved ones’ future and guarantee that the family’s life objectives are achieved. Additionally, under Sections 80C and 10(D) of the Act, your nominee or family may be exempt from paying taxes on the death benefit, and you may deduct the cost of term insurance premiums from your taxes. Additionally, the Act’s Section 80D enables you to claim tax advantages for a select group of riders that you purchase to pay for medical costs associated with serious diseases or impairments. Purchasing a term insurance coverage might be a priceless present for your loved ones.