Life Insurance is considered one of the most important insurance covers that everyone must have to secure the financial future of their family in the event of the untimely death of the breadwinner. There are different types of life insurance policy that you can buy, like ULIP (Unit Linked Insurance Plan), term policy, or endowment plan to choose your specific needs. But, irrespective of the type of the policy you purchase, the premium you pay for life insurance is eligible for tax deduction under Section 80C of the Income Tax Act, 1969. The maximum deduction you can claim is 1.5 lakh INR.
Apart from the deductions on premiums, the death benefit received upon maturity of the policy or demise of the policyholder is exempted from tax under Section 10(D).
Health Insurance
In the purview of the rising costs of medical treatments, there is a pressing need for everyone to have health insurance. Your insurance portfolio is incomplete without
health insurance plans that cover you and your family. It is paramount that you buy a health insurance policy not just to save taxes but primarily to get a financial cushion against the medical contingencies. The tax benefits of health insurance are covered under Section 80D of the Income Tax Act.
If you buy a policy for yourself, your spouse and children, the maximum deduction you get is 25,000 INR. If you are a senior citizen, the tax deduction limit on medical insurance is 30,000 INR. If you have two policies, one for yourself, spouse and children and the other for your parents, you are eligible to get deductions up 25,000 INR on both the policies.
The maximum deduction you can get on your health insurance premiums is 60,000 INR.
Pension Plans
Pension Plans, also known as annuity plans, are very similar to life insurance plans. However, unlike life insurance plan, which is taken mainly for the financial protection of your family after the death of the policyholder, the pension plan is taken to financially secure your post-retirement life and get a steady stream of income.
The maximum tax deduction you can get for the premium paid for pension plan is 1.5 lakhs INR; the deductions are applicable under the sub-sections of the Section 80C. Also, if the policyholder dies, the pay-out received is exempted from tax.
You may have invested in many tax saving schemes like
mutual funds and
fixed deposits, but investment in insurance is a great way to get protection against risks and earn tax benefits. However, it is recommended to keep an eye on tax rules and regulations regarding tax saving as there can be changes made to them from time to time.
