Income Tax Benefits of Paying Insurance Premium
Taxpayers often look for tax-saving options to help reduce their taxable income. But many usually forget that investments should not always consist of instruments that give higher returns in shorter duration. Some financial tools also give you security from the uncertainties in life and aid in protecting your loves ones. Life insurance and health plans are tax-saving vehicles that you should consider. Let’s understand the perks of having health and term insurance tax benefitof paying the insurance premiums.
Tax Benefits of Paying Life Insurance Premium
You can claim income tax deductions on the premiums that you pay towards securing a term insurance plan. Under Section 80C of the Income Tax Act, 1961, a maximum amount of INR 1,50,000 can be claimed per financial year.
Another tax advantage that you can avail of is the death benefit or the maturity benefit of your policy. Under Section 10(10D), you are eligible to claim the corpus as tax-free and exempt it from tax.
Tax Benefits of Paying Health Insurance Premium
Under Section 80D of the Income Tax Act, 1961, you can claim an income tax deduction on the premiums paid for a health plan. But the maximum amount that you can file for returns varies according to age. Here is the deduction amount you can claim:
- For family members below the age of 60:
- If a health plan is bought for a family member like spouse, children or self below the age of 60, the maximum deduction that you can claim is INR 25,000
- If a health plan is bought for your parents who are below the age of 60, a tax benefit of INR 25,000 can be claimed
- For senior citizens:
- If a health plan is bought for a family member like spouse, children or self who is above 60 years of age, the maximum deduction that you can claim is INR 50,000
- If a health plan is bought for either parent who is above the age of 60, an income tax deductions of INR 50,000 can be availed
Now that you are aware of the benefits you can get under various tax provisions, you should consider getting an insurance plan for you and your family. Not only does an insurance policy provide tax advantages but also gives security and aids in long-term savings. With health insurance, you are able to cover your medical expenses and safeguard your loved ones from any emergency. Many life insurance policies give you a life cover as well as a maturity benefit, helping with wealth creation. In this way, you can save on taxes and also invest your money in tools that give quality returns.