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Life insurance policies are a must-have, given that they offer much-needed financial security to the dependents of the life assured in case of an untimely eventuality. In addition to the many benefits they offer, life insurance policies also serve as tax-planning tools since policyholders and their nominees are eligible for claiming tax benefits under the provisions of the Income Tax Act, 1961. This article lists the various sections under which you can claim tax benefits if you have a life insurance policy.
You can claim tax deductions under Section 80C of the Income Tax Act for premiums that are paid towards a life insurance policy, up to a maximum of Rs.1,50,000. Tax benefits can also be claimed on premiums paid towards retirement or pension policies under Section 80CCC of the Income Tax Act, 1961, up to Rs.1,50,000
Points to Note:
Premiums paid towards health insurance policies qualify for tax benefits under Section 80D of the Income Tax Act, 1961. If you have purchased any rider/add-on that offers medical insurance coverage along with your life insurance policy, you can claim tax benefits under Section 80D.
Any sum that you or your nominee may receive through a life insurance policy, including bonuses, is eligible for tax exemptions under Section 10(10D) of the Income Tax Act.
For retirement/pension policies, a third of the payout that you receive through the policy at the time of your retirement is exempt from tax.
*Note: Tax laws are subject to change from time to time. Thus, it is advisable to consult a tax advisor or check the latest updates on income tax laws and acts before making taking any financial decisions.
You can purchase the following types of life insurance products to avail tax benefits:
Life insurance policies can be purchased through online or offline channels. If you haven’t already bought a life insurance policy, make sure to purchase one at the earliest.
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