Term Insurance Tax Benefits 2022
Term Insurance Tax Benefits
The term insurance plan, which provides benefits over a predetermined time period, is often referred to as a pure life insurance plan. The owner of the insurance policy has two alternatives after the insurance term expires. He can first extend the term insurance for an additional term before converting it to permanent protection. Or he can cancel the term insurance policy and let the coverage expire.
The main benefit of term insurance is that it entitles you to tax breaks under Sections 80D and 80C of India’s Income Tax Law. Age, health, and life expectancy are additional factors that influence the cost of term insurance.
By choosing term insurance, you unlock a number of opportunities to receive tax advantages over your income. The tax incentive that you can find in sections 80c and 10(10D) of the 1961-first-published Income Tax Act of India is the one that you can most frequently take advantage of. With term insurance, you can easily claim the Section 80C deduction on the paid premiums up to Rs 1.5 lacs years. On the other hand, section 10 will exempt the death benefit of your term plan from income tax (10D)
Does Section 80C Cover Term Insurance?
A person is qualified for a tax exemption under the Income Tax Act (ITA) on the premium they pay for term insurance. The annual maximum for tax exemption is Rs. 1.5 lacs. Additionally, a person can purchase term insurance and cover their spouse and children with its premiums. Even this kind of insurance coverage qualifies for a tax break. Keep in mind that only plans issued prior to March 31, 2012, are eligible for the tax exemption.
Term insurance issued after April 1, 2012, is still eligible for tax benefits under ITA Section 80C. However, the benefits available here are just 10% of the term insurance policy’s sum assured. On the other hand, the tax advantage will increase by 5% and increase to 15% of the total amount assured by the term insurance if a person suffers from any of the illnesses or disabilities listed under Sections 80U or 80UDB.
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