Term insurance serves to give financial protection to our family even in our absence. Buying the perfect life insurance plan ensures that the family is taken care of even when we are not around. Term plans offer that security and ensure that our loved ones have a financial cushion such that they can maintain their lifestyle even in the absence of the breadwinner. As the policyholder, you just need to pay affordable premium amounts regularly. This payment is either made in lump sum or paid in the form of regular payouts. The frequency at which you pay such premium amounts is also flexible and you get to choose the payment term frequency as either monthly, quarterly or annually, at the time of buying the policy.
Term insurance plans are not only the best financial vehicle to get financial protection against unforeseen events, but also an efficient tax-saving investment. As a tax saving investment, term plans are preferred by most individuals because life cover is already an inherent benefit of the life insurance plans. On top of it, getting the tax benefits is a cherry on the cake.
First and foremost, under Section 80C of the Income Tax Act, you can claim deductions of up to Rs 1.5 lakh per annum on the premiums you pay for your term insurance. This deduction comes with specific instructions, however. The premium paid towards life insurance plans is eligible for deduction as per this law, up to the maximum limit of Rs 1.5 lakhs only. In order to claim a deduction under section 80C, the premium paid should not exceed 10% of the sum assured where the policy has been issued after 1st April 2012. For policies issued prior to 1 April 2012, the premium paid should not exceed 20% of the sum assured. How does this work? Simply, you can reduce up to Rs 1,50,000 or the sum you actually paid, whichever is more, from your total taxable income while filing your Income Tax Return.
Apart from that, there are additional savings on the maturity amount as well. In case of your death within the defined policy period, the death benefit, including any bonuses received by the nominee, is fully tax-exempt under Section 10 (10D) of the Income Tax Act. This amount is entirely tax-free in the hands of the beneficiary or the receiver as stated in the policy documents.
In fact, even when you avail additional covers, whether through the life stage feature of the plan or through the riders, this additional premium can also be included in the tax deduction, subject to the requirements stated before. Some popular riders available with term insurance plans include accidental death rider, a disability rider, critical illness rider etc. So, you can reap the tax benefits with a wider coverage too!
If you are looking at tax-saving investments, you have a plethora of options to look at, across ULIPs and other schemes. But the process of filing Income Tax is a complicated one itself. Therefore, when choosing a tax-saving investment, term insurance scores high on that parameter due to simplicity. Life insurance plans are a favourable tax-saving investment in 2019, especially because all other instruments within the same section of the Income Tax Act are far more complex. Besides, the term plan can serve dual purposes: it provides both a life cover as well as tax exemption.
Hence, get yourself a pure protection plan with a range of additional coverage options and protect the financial future of your loved ones with a term plan like the PNB MetLife Mera Term Plan at an affordable cost.
*Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details. Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time. The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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