Why Term Policy is the Best Tax Saving Insurance
by Jessy Jose An Insurance AdvisorInsurance plans are only effective when they are tailored to suit the needs of a family, that is one of the reasons why there are so many different insurance plans out there in the market. An insurance policy will provide cover in the event of the death of the policyholder; people invest in insurance for this very reason. But if you need to make sure that your insurance amount is sufficient enough to see your family through tough times, you need to take various factors into consideration before opting for an insurance policy. These factors include, the current income of your family, your loans if any, your expenses etc. But at the same time you also need to consider what type of Life Insurance you want to invest in.
A term plan insurance is the simplest and also the cheapest
form of insurance. Once the policy term is up or in case of the death of the
policyholder, whichever is first the nominee receives a lump sum payment from
the insurer. If the policyholder outlives the policy, he/she receives no
benefit. But on the other hand the premium for term insurance is minimal.
One of the key benefits of term policy is that it comes with
a hoard of tax benefits for the policyholder and also the nominee. Here’s are
some of the Tax Benefits
that come along with a term plan.
1. On premium: The insurance premium paid by the policyholder
is allowed deduction under the provisions of Section 80C of the Act. This means
that this part of your income is exempt from Income Tax. The maximum amount of
deduction that an assessed can claim will be limited to Rs 1,50,000 under
Sections 80C, 80CCC of the Act.
2. On insurance pay out: Under Section 10(10D) of
the Income Tax Act the nominee of a term plan insurance receives exemption of
income tax on the amount he/she receives on an insurance pay out. The sum
allocated by way of bonus on such policy, is also exempt from any income tax.
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Created on Sep 28th 2017 04:07. Viewed 821 times.