It becomes essential to purchase term insurance policy as it gives financial security to your loved ones after you are no longer around. The sum which comes with a term insurance plan helps your family meet their financial goals and objectives, such as the education of your children or the payment of a home loan.
Despite being a great financial backup plan, term insurance policies can also act as good tax-saving instruments which makes them one of the best options for life insurance available in the market. The question ‘is term insurance premium tax free’ often makes rounds of the internet, and will post will talk about it in detail.
Let’s learn more about how you can avail tax-saving benefits on your next purchase of a term plan.
Benefits under Section 80C of the Income Tax Act
Under Section 80 C of the Income Tax Act, 1961, individuals are permitted tax exclusion up to Rs.1.5 lakhs per annum on their term insurance policy. You, your spouse, or your dependent kinds can avail these tax benefits.
The answer to the question ‘is term insurance premium tax free’ does not end here, as there are a host of other tax benefits.
Benefits under Section 10 (10D) of the Income Tax Act.
Section 10 (10D) of the Income Tax Act, 1961 offers exemption benefits — any sum which is received under death advantage for the term plan and maturity benefit, including rewards if any, are exempted from tax. In this scenario, it does not matter if you receive the sum from India or some other country.
However, these clauses would not be applied, if:
- The sum is received under Section 80DD (3) or 80DDA (3).
- If you receive the sum under the Keyman Insurance Policy (life insurance policy availed by the employee of a company — the benefits, in this case, go to the company).
- A sum of money which isn't received as a death benefit, or is a part of a policy issued on or after April 1, 2003, but at the latest the 31st day of March 2012. These benefits are also not applicable if the premiums that have been paid in this policy are over 20% of the overall sum guaranteed.
- If your term insurance policy is issued on or after April 1, 2012, at that point the tax exemptions are only applicable if the premium paid doesn't surpass 10% of the sum guaranteed.
Benefits under Section 80D of the Income Tax Act
Section 80 D of the Income Tax Act, 1961 permits tax benefits on medical coverage premiums of term insurance. This means that if your term insurance plan comes with riders such as Surgical Care Rider, Critical Illness Rider, Hospital Care Rider, and so forth, then you can get these tax-saving benefits. You, your spouse, your dependent children, your parents (irrespective of their dependency upon you) can receive tax exemptions under this scheme.
Refund in Term Plan and Free Look Period
Insurance Regulatory and Development Authority of India (IRDA), an autonomous, statutory body which works with regulating and promoting the insurance and re-insurance industries in India, manages and makes arrangements to that make sure that the purchasers of term policies have a pleasant experience. One of such methods is a free-look period that comes with these policies. Under the free-look period, if you have acquired a policy and do not quite agree with its terms and conditions, you, by all measures, have the option to return the policy by stating the reason of the refund. This option is available from 15 days of purchasing the policy. If you
Aside from offering insurance which is of great benefit to your family members, Future Generali Flexi Online Term Insurance plan comes with tax benefits. Unlike the general ‘insurance cover for a small price’ plans, you can select from plans that will offer regular income benefit to your dependents. You also have the option to choose plans that will return all the premiums that you have paid for the cover if you survive the tenure of the cover.