The most basic term insurance tax benefits that any Indian taxpayer can avail falls under the purview of Section 80C of the Income Tax Act, 1961. In fact, many people think of this Section as the most popular tax-saving tool.
Under this Section, you can get term insurance tax benefits of up to Rs. 1.5 Lakh for the premiums paid for buying the plans. A crucial aspect that you should know about is that the upper limit of tax deductions available under this Section also includes tax benefits on investments in PPF (Public Provident Fund), tax-saving Fixed Deposits, and several other tax-saving instruments.
You can maximize term life insurance tax benefits by investing in a substantial life cover for yourself and benefit your family members in the long run.
The premium payable amount and tax savings have historically been a key consideration among Indians planning to purchase a life insurance plan. However, the latest Max Life IPQ 6.0 Survey recorded a shift in this thinking. Life cover has now gained almost equal importance among Indians planning to purchase a life insurance policy. For further insight into the current perception of life insurance among Indians, please read the complete Max Life IPQ 6.0 survey report findings.
Significant Facts Related to Term Insurance Tax Benefits U/S 80C
- The annual premiums you pay for a term insurance plan must not exceed ten percent of the chosen sum assured. If it does exceed otherwise, term insurance tax benefits under Section 80C will be applied proportionately.
- For term insurance plans issued before March 31, 2012, the term insurance benefits in income tax are applicable if the annual premium is under twenty percent of the sum assured.