Term Insurance Can Help Save TaxEnter Details Below
Understanding Tax and ways to save Tax
Tax Slabs Explained+

How will my savings in a life insurance plan help my tax situation?

What follows below will give you a good idea of how your investments not only protect you and your family; they also protect your taxes.

Tax Slabs

This explains how the various tax brackets in India work and how much tax relief we are all eligible for. The new tax structure was initiated on 1st April 2016.

The tax structure is as follows:

Tax slabs for Financial Year 2016-17 (Assessment Year 2017-18)
For Individuals below 60 years of age
Income Level Tax Rate
Upto Rs. 2,50,000 Nil
Rs. 2,,50,001 - Rs. 500,000 10%
Rs. 500,001 - Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Tax slabs for Financial Year 2016-17 (Assessment Year 2017-18)
For Senior Citizens aged 60 years 
or above but less than 80 years
For Very Senior Citizens aged
80 years or above
Income Level Tax Rate Income Level Tax Rate
Upto Rs. 300,000 Nil - -
Rs. 300,001-Rs. 500,000 10% Upto Rs. 500,000 Nil
Rs. 500,001-Rs.10,00,000 20% Rs. 500,001-Rs.10,00,000 20%
Above Rs. 10,00,000 30% Above Rs. 10,00,000 30%

Surcharge on Income Tax:

From Financial Year 2013-14, Surcharge is applicable @ 10% on tax payable in case of an individual if total income exceeds Rs. one crore

Education Cess & Secondary & Higher Education Cess on Income Tax

Education Cess @ 2% & Secondary & Higher Education cess @ 1% will be payable on the amount of income tax.

Service Tax

All premiums and charges are subject to service tax and cess (SBC and KKC) as per prevailing tax laws. Current Service Tax rates are as under:

  • Traditional endowment/ annuity 3.750% on First year premium
  • 1.875% on subsequent year premium and
  • 1.50% in case of Single premium annuity Products.
  • ULIP charges, Term, Health products & Riders, ST rate is 15%.

The above are extracts from the Income Tax Act’1961. Please note that tax laws are subject to change and hence before placing reliance on the above, the latest version of the above section should be checked. It should also be noted that the change in tax laws could have retrospective effect also.
This information should not be construed as expert tax, legal or investment opinion from Max Life Insurance Company Limited. Max Life Insurance Company Limited would not be responsible in any manner for decisions made on the basis of above information.
Please consult your tax advisor for claiming tax benefits on insurance products.
Sec 194DA of Income Tax Act 1961 provides for deducting tax (TDS) on policyholders payout under life insurance policy w.e.f. 01 Oct 2014. TDS, if applicable, will be deducted at 2% if valid PAN is available upto 31st May 2016. W.e.f. 01st June 2016, TDS rates has been reduced to 1%. 
Policyholders can furnish forms 15G/15H for non deduction of TDS where total income /estimated total income during financial year does not exceed maximum amount not chargeable to tax. Further in case valid PAN is not available, rate of TDS would be 20%.

Tax benefits of term insurance+

Term Plan is a simple protection plan with life cover and no maturity benefits. It is an affordable form on insurance providing a large cover at a relatively smaller premium. A non-smoker male, 28 years of age, can get a term plan for a premium as low as Rs.576/month, for a 30 year policy term.

While availing tax benefits should not be the primary reason to purchase a term life insurance, it is undoubtedly an efficient tax saving instrument. The premiums paid as well as the death benefits are exempt under tax regulations in India.

Benefits Under Section 80C

The section 80C of the Indian Income Tax Act allows exemption for life insurance premiums up to Rs. 1.5 lakh per annum. This amount can also include life insurance premiums paid for your spouse and/ or children.

Apart from this, insurance policies issued on or after April 1, 2012 get a tax deduction limited to 10% of the total sum assured. However, if a person is suffering from any ailment listed u/s 80DDB or suffers from a disability listed u/s 80U, then above 10% would be increased to 15%.

Benefits Under Section 10 (10D)

Apart from saving tax on premiums you can also save tax on the returns u/s 10 (10D) of the Income Tax Act. The maturity amount or death benefit received is fully exempt under the provisions of this section. This exemption is given to the beneficiaries and comes without an upper limit.

It is also stated in Section 10 (10D) that the maturity amount will be taxable if the premium payable in any of the years during the period of the policy exceeds 20% of the actual capital sum assured. However, this scenario rarely occurs in a term plan as the sum assured is generally much higher than the annual premium.

It is still wise to consult a tax expert advisor and take an informed decision because the benefits can vary for your specific case and tax bracket.

Tax benefits are subject to changes in tax laws. Please consult your tax advisor for details.

Knowledge Centre
Tax saving calculator
You may be entitled to certain applicable tax benefits on your premiums and policy benefits. Please note that all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws. The above are extracts from the Income Tax Act’1961. Please note that tax laws are subject to change and hence before placing reliance on the above, the latest version of the above section should be checked. It should also be noted that the change in tax laws could have retrospective effect also.

This information should not be construed as expert tax, legal or investment opinion from Max Life Insurance Company Limited. Max Life Insurance Company Limited would not be responsible in any manner for decisions made on the basis of above information.

Please consult your tax advisor for claiming tax benefits on insurance products.

Sec 194DA of Income Tax Act 1961 provides for deducting tax (TDS) on policyholders payout under life insurance policy w.e.f. 01 Oct 2014. TDS, if applicable, will be deducted at 2% if valid PAN is available upto 31st May 2016. W.e.f. 01st June 2016, TDS rates has been reduced to 1%.

Policyholders can furnish forms 15G/15H for non deduction of TDS where total income /estimated total income during financial year does not exceed maximum amount not chargeable to tax. Further in case valid PAN is not available, rate of TDS would be 20%.

Max Life Insurance Co. Ltd. is a Joint Venture between Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Max Life Insurance Co. Ltd., 11th Floor, DLF Square Building, Jacaranda Marg, DLF City Phase II, Gurugram (Haryana) - 122002. Contact toll-free numbers- 1800 200 5577. Online Term Plan- 1800 200 3383. Email ids: online@maxlifeinsurance.com; service.helpdesk@maxlifeinsurance.com. For more details on the risk factors, terms and conditions, please visit the website www.buyonline.maxlifeinsurance.com and read the sales brochure carefully before concluding a sale. Life Insurance coverage is available in this product. This plan is a pure term insurance plan that provides only death benefit and no maturity or surrender benefit. Insurance is a subject matter of the solicitation. Trade logos displayed belong to Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. respectively and are used by Max Life Insurance Co.Ltd. under a license.

Max Life Online Term Plan Plus is available in 12 customizable options which are a combination of the product variants and riders. For details on the riders- Max Life Waiver of Premium Plus Rider (UIN104B029V01) & Max Life Comprehensive Accident Benefit Rider (UIN104B025V01) please refer to the rider brochure on https://buyonline.maxlifeinsurance.com
IRDAI Regn. No. 104
Beware of spurious phone calls and fictitious/fraudulent offers. IRDAI clarifies to public that
  • IRDAI or its officials do not involve in activities like sale of any kind of insurance or financial products nor invest premiums
  • IRDAI does not announce any bonus
  • Public receiving such phone calls are requested to lodge a police complaint along with details of phone call, number