Why term life insurance remains a favourable tax-saving instrument
With the tax filing date still a couple of months away, this is the right time for taxpayers to select the best tax-saving instruments and avoid the last minute rush. There are now several products available in the market to help you save taxes under different income tax deductions sections. However, amidst all the various options, term insurance continues to be one of the most popular choices. What makes term insurance such a popular option among people wanting to save taxes? These are five of the top reasons:
1. Benefits under Section 80C
Under Section 80C of the IT Act, you can claim deductions of up to Rs 1.5 lakh per annum on the premiums you pay for your term insurance.
You can avail of the benefit for yourself, your spouse and even your dependent children. This term insurance tax benefit can help in significantly reducing your tax payout.
2. Benefits under Section 80D
Many term insurance products now come with built-in riders such as surgical care, critical illness, hospital care and more. So, if you purchase one such term insurance, you are entitled to receive the medical insurance tax benefit.
With this, you can claim deductions of up to Rs 25,000 if the policy is for you, your spouse or dependent children. If the policy is in the name of your parent who is a senior citizen, the deductions can be up to Rs 50,000.
3. Benefits under Section 10 (10D)
Apart from tax savings on the premium, there are additional savings on the maturity amount as well. In case of your death within the defined policy period, the death benefit, including the bonus if any, received by the nominee is fully tax-exempt under Section 10 (10D) of the IT Act.
However, this comes with a few clauses in which the benefit will not be applicable. For instance, the term plan tax benefit will not be applicable if the amount is received under Section 80DD (3) or 80DDA (3) or if the amount is received under Keyman Insurance Policy.
4. Lower Premiums
Apart from the tax saving sections, there are a few other reasons responsible for the increasing popularity of term insurance. These policies have considerably lower premiums as compared to whole life insurance policies. So, term insurance is also a highly affordable way to provide financial assistance to your family in case of your demise.
This term insurance benefit is crucial for people who have a habit of planning their taxes when the tax filing date is just around the corner. Most top insurance providers now let you purchase term insurance online.
The whole process is super quick and convenient and can be completed right from the comfort of your home or office.
Saving taxes and enjoying a host of other benefits with term insurance
While tax benefit shouldn’t be the only reason while selecting an insurance plan, there is no denying the fact that the term insurance tax benefit is one of the best ways to save taxes. Along with the tax benefit, the policy also covers your life at a highly affordable price to make sure that your family stays financially protected in case of your demise.
Browse through the insurance options offered by a top insurance provider to pick yourself a highly rewarding term insurance policy.
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