Myth: Life Insurance is only a tax saving tool!
It’s just a tax saving tool. That’s the first thing that comes to mind for most people when they think of insurance. And yes, it is also the biggest myth that the sector attracts.
So what’s the reality?
Insurance plans do offer you tax benefits. To be precise, the amount is deducted from your gross total income under Section 80C of the Income Tax Act, 1961 (subject to the conditions given therein). However, unlike other investment options like the Public Provident Fund or small savings schemes (post office deposits and national savings certificates), it also offers so much more.
The primary function of life insurance is to protect you from unexpected losses such as sudden death or liability. It offers you complete security through risk coverage against the uncertainties of life. And, yes, it also serves as a good investment option and tax saving tool. So, if you want an ideal blend of risk cover, returns, and tax benefits, life insurance is a good choice.
*Tax benefits are subject to changes in the tax laws in the future. Please consult your tax advisor for more details.