Insurance
•01 min read
What do you think of when you hear the word insurance? Complicated features, a lot of money spent, or perhaps something that isn’t for you? Well, this isn’t actually true; insurance has become quite a necessity these days. Whether it’s motor insurance, life insurance, health insurance, or even options like cyber insurance and home insurance, getting a policy that suits your needs has become important.
For example, life insurance plans help you build a strong financial safety net for your loved ones, so they can reach their dreams and cope with ever-rising inflation, even in your absence. On the other hand, health insurance protects you and your savings from hefty medical bills, letting you focus on your recovery and not the financial aspects.
In a nutshell, insurance acts as a strong tool to manage your money whilst protecting your savings. It takes care of unexpected costs, whether big or small, so you can sail through life without a worry.
And the cherry on top? Tax benefits! Some insurance plans not only provide financial safety but also tax-saving options. Let’s dive deeper.
Some investment-insurance combos do not levy any long-term capital gains tax on maturity returns, even though they are market-linked. Further, these plans may also provide free fund switching, under which you can switch funds within the same plan without paying additional taxes. This means that such policies also offer short term capital gains.
Note: The applicability of this benefit can depend on various factors like the plan you’ve chosen, the premium amount, etc.
3. Health insurance tax benefits
You also get tax benefits on the premium you pay for health insurance plans, under Section 80D of the Income Tax Act. The exact limit depends on your age.
Insurance can become an efficient way to be financially prepared in the face of adversities as well as get extra benefits like tax-saving options. Make sure you pick a plan that fits your financial needs and budget.
T&C: Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfillment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Please consult your own tax consultant to know the tax benefits available to you.
Let’s have a look at how you can save taxes under different types of insurance plans:
1. Life insurance tax benefits
You get tax benefits up to ₹1.5 lakh on the premium you pay for a life insurance plan (term insurance, whole life insurance, ULIP, etc.) under Section 80C of the Income Tax Act. Further, if you choose any health add-ons with your life insurance plan, you get tax benefits under Section 80D as well.
Note: Please keep in mind that your life insurance plan’s claim amount will be exempt from taxation under Section 10(10D).
2. No LTCG on certain investment + insurance plans
