• Business NewsBeta
  • Shows
    • Daily Show2+2=5Take it EasyRed AlertFormula GuruMoney GyanMoney CentralMoney timeJhatpat
    • Weekly ShowMoney ComicsEconomicomRealty CheckSmile and payMoney TalesSpend WiseCompanynama
  • Insurance
  • Savings
  • Loan
  • Stocks
  • Mutual Funds
  • Real Estate
  • Crypto
  • Tax
    • हिन्दी
    • తెలుగు
    • मराठी
    • বাংলা
    • ગુજરાતી
    • ಕನ್ನಡ
  • Close
Subscribe Follow

Share

  • Facebook
  • Twitter
  • Whatsapp
  • LinkedIn
  • Telegram
  • Daily Show
    • 2+2=5
    • Take it Easy
    • Red Alert
    • Formula Guru
    • Money Gyan
    • Money Central
    • Money time
    • Jhatpat
  • Weekly Show
    • Money Comics
    • Economicom
    • Realty Check
    • Smile and pay
    • Money Tales
    • Spend Wise
    • Companynama
  • Insurance
  • Savings
  • Loan
  • Crypto
  • Stocks
  • Mutual Funds
  • Real Estate
  • Tax
  • Exclusive
  • Home » News » Insurance » Explained: Tax benefits of a term insurance plan

Explained: Tax benefits of a term insurance plan

The additional health related riders accompanied with term insurance plan allows tax-saving benefits up to Rs. 25,000

  • Naval Goel
  • Updated On - October 10, 2021 / 10:48 AM IST
Explained: Tax benefits of a term insurance plan
Policyholders can save a significant amount of money on an overall term insurance plan.

If you think that the headline has some typo error then no it is not the case. As a part of the insurance industry, we are always extremely cautious with our words. Pun Intended!

Today we are going to uncover a hidden fact and a big helpful tip to save an additional tax with your Term Insurance Plan. While it is a fact that the biggest reason for a majority of young people, who have recently joined the workforce, to buy a term insurance policy is to save tax, but still there is a severe lack of awareness about different parameters to save money from paying taxes.

Indeed, when it comes to Term Insurance, i.e. a pure protection insurance plan, the 80C Act of the Incomes Tax Act, 1961 is the foremost section that allows saving money with an exemption up to INR 1.5 Lakh annually. This tax-saving benefit can be availed on the policies taken for own-self, spouse or dependent kids. Also, the death or maturity benefit received under Term Insurance is exempted from the tax under Section 10 (10D) of the Income Tax Act, 1961 where the beneficiary receives the promised amount.

However, 80D Act can also play a crucial role if used effectively. Several health-related riders come with the term insurance policies such as Critical Illness rider, Surgical care rider, Hospital Care rider and etc that can be clubbed with a term insurance plan with nominal additional charges to make the term insurance plan potent. Interestingly, the policyholder is eligible to claim tax-saving benefits on these riders as well under 80D. This means the term insurance can give you the benefits of both 80D & 80C in one plan.

While there are certain considerations to understand accompanied with these riders. Primarily, there is a limit on the amount i.e. Rs. 25,000. The tax deduction under Section 80D can’t be more than the amount of Rs. 25,000 that a policyholder can enjoy on these riders.

In case, If a policyholder provides cover to his/her parents under a separate but similar policy then also, the policyholder can take the advantage of tax-saving benefits up to Rs. 25,000 and if the parents are over 60, the deduction eligibility is up to Rs 50,000. This means that policyholders can save a significant amount of money on an overall term insurance plan.

For senior citizens’ policies, the deduction limit goes up to Rs. 50,000.

Indeed, the tax-saving stands a strong reason to invest in term insurance, however, it shouldn’t be the only reason the select a particular term insurance company and its plan. The selection of a term insurance company and its plan should be determined based on its features, wide range of benefits of the plan, claim settlement ratio of the company, inclusions, and exclusions.

(The author is Founder & CEO, PolicyX.com; views expressed are personal)

Download Money9 App for the latest updates on Personal Finance.

follow us

  • Facebook
  • Twitter
  • LinkedIn
  • Telegram
  • Youtube
  • Instagram

also read

  • IRDA bats for reforms in the insurance sector

    IRDA bats for reforms in the insurance sector

  • How to save Health Insurance Claim from Rejection?

    How to save Health Insurance Claim from Rejection?

Read more news on

  • claim settlement ration
  • income tax
  • income tax benefits
  • insurance
  • Life Insurance

Latest Video

SEE MORE
What is target price for Nifty and Sensex?

What is target price for Nifty and Sensex?

Updated: June 28, 2022
Why wheat flour prices increased after wheat export ban?

Why wheat flour prices increased after wheat export ban?

Updated: June 27, 2022
Is Petrol-Diesel price increase again on the cards?

Is Petrol-Diesel price increase again on the cards?

Updated: June 23, 2022
Why are edible oil prices falling?

Why are edible oil prices falling?

Updated: June 23, 2022
Why popular AMC stocks are down?

Why popular AMC stocks are down?

Updated: June 22, 2022
Why are car, two wheeler prices not falling?

Why are car, two wheeler prices not falling?

Updated: June 21, 2022
IRDA bats for reforms in the insurance sector

IRDA bats for reforms in the insurance sector

Updated: June 20, 2022
Should you invest in Gold when stock market is falling?

Should you invest in Gold when stock market is falling?

Updated: June 19, 2022
Open in App

Related

  • LIC IPO: Here’s what brokerages say

    LIC IPO: Here’s what brokerages say

  • Why is investing in health Insurance for women before the age of 30 important?

    Why is investing in health Insurance for women before the age of 30 important?

  • Insurance must have in 2022

    Insurance must have in 2022

  • Choosing right insurance plan for mental health, well-being

    Choosing right insurance plan for mental health, well-being

  • LIC IPO to come out by end of March 2022

    LIC IPO to come out by end of March 2022

  • Just a dream: Increasing the 80C limit

    Just a dream: Increasing the 80C limit

Videos

  • GST Council may reduce tax on orthopedic, ostomy appliances, etc
    Exclusive

    FPI buying may resume in coming 1-2 quarters

  • Is Petrol-Diesel price increase again on the cards?
    Budget

    Is Petrol-Diesel price increase again on the cards?

  • Complaint process on loan recovery agent harassment
    Loan

    Complaint process on loan recovery agent harassment

  • Will buy stocks in India if Nifty drops to 14,000: Christopher Wood
    Exclusive

    PNB, UBI turn ex-dividend

  • Why are edible oil prices falling?
    Exclusive

    Why are edible oil prices falling?

  • TV9 Sites

  • TV9 Hindi
  • TV9Telugu.com
  • TV9 Marathi
  • TV9 Gujarati
  • TV9 Kannada
  • TV9 Bangla
  • News9 Live
  • Know this india
  • Money9 Sites

  • Money9 Hindi
  • Money9 English
  • Money9 Marathi
  • Money9 Telugu
  • Money9 Gujarati
  • Money9 Kannada
  • Money9 Bangla
  • Topics

  • Insurance
  • Savings
  • Loan
  • Stocks
  • Mutual Funds
  • Real Estate
  • Tax
  • Crypto
  • Exclusive
  • Daily Shows

  • 2+2=5
  • Take it Easy
  • Red Alert
  • Formula Guru
  • Money Gyan
  • Money Central
  • Jhatpat
  • Money time
  • Weekly Shows

  • Money Comics
  • Economicom
  • Realty Check
  • Smile and pay
  • Money Tales
  • Companynama
  • Spend Wise
  • Follow us

  • FaceBook
  • Twitter
  • Youtube
  • Instagram
  • Linkedin
  • Download App

  • Andorid
  • ios
  • Contact Us
  • About Us
  • Advertise With Us
  • Privacy & Cookies Notice
  • Complaint Redressal
  • Copyright © 2022 Money9. All rights reserved.