Maximizing Tax Benefits with LIC Jeevan Labh under Section 80C

Overview of LIC Jeevan Labh (Plan 936)

LIC Jeevan Labh is a limited premium paying, non-linked endowment plan that offers financial protection through both death and maturity benefits. Here are some of its key features:

• Death Benefit: In the unfortunate event of the policyholder's demise, the nominee receives a lump sum amount.

• Maturity Benefit: If the policyholder survives the policy term, they receive a guaranteed maturity amount.

• Bonuses: LIC declares bonuses based on its profits, adding to the policy's overall benefits.

• Loan Facility: Policyholders can avail loans against the surrender value of their policy in times of need.

• Additional Coverage: Optional riders for accidental death and critical illness are available, enhancing protection.

• Tax Savings: Premium payments qualify for deductions under Section 80C, potentially saving you up to ₹46,800 annually.

Tax Savings with LIC Jeevan Labh under Section 80C

Under Section 80C, individuals can claim tax deductions for premiums paid toward life insurance policies. Here’s how it works:

• Eligible Premiums: Any premium you pay for your LIC policy contributes to your Section 80C limit, which is capped at ₹1.5 lakh per financial year.

• Tax Savings Calculation: If you invest the full ₹1.5 lakh, you could save approximately ₹46,800 if you fall under the highest tax bracket of 30%. For those in the 20% bracket, the savings can amount to around ₹30,000.

• Premium Limit: It's essential to remember that the deduction is valid only if the premium is less than 10% of the sum assured.

When to Invest for Maximum Benefit?

To take full advantage of the tax benefits under Section 80C, consider buying your LIC Jeevan Labh policy between April 1 and March 31 of the following financial year. Opting for a yearly premium payment mode ensures you qualify for deductions in that financial year.

Important Pointers to Note Under Section 80C

• Purchasing LIC Jeevan Labh policy requires the buyer to pay a premium amount against it. The annual premium you pay for the life coverage (even if the policy is not under your name) is eligible for tax savings deduction under Section 80C.

• It is important to know that the deduction with LIC Jeevan Labh under 80C is only valid if the premium amount is less than 10% of the basic sum assured. 

• Tax savings with LIC Jeevan Labh under 80C can be to the tune of Rs. 1.5 lakhs on investing a proportionate amount in the life insurance policy.

• For individuals falling in the highest tax bracket of 30%, one can save up to Rs. 46,000 approximately. Likewise, those belonging to the tax bracket of 20% can save approximately Rs. 30,000 under Section 80C of the Income Tax Act on investing in LIC Jeevan Labh. 

Additional Tax Benefits

In addition to the deductions available under Section 80C, all payouts from LIC Jeevan Labh—including death benefits, maturity amounts, bonuses, and surrender values—are tax-free under Section 10(10D). This means you can enjoy your returns without worrying about tax implications, further enhancing the policy's attractiveness.

Wrapping It Up

Buying the LIC Jeevan Labh policy not only secures your family's financial future but also offers significant tax savings. With benefits under both Sections 80C and 10(10D), this policy serves as a dual-purpose tool—providing peace of mind and aiding in effective tax planning.