Prices Increasing Soon
When it comes to tax-saving options, term insurance is a popular choice for securing financial protection and maximising tax benefits. While most of us relate term insurance with Section 80C, it’s important to note that Section 80D can also provide additional tax benefits in specific situations. These deductions and exemptions can help reduce your tax liability while ensuring your loved ones are taken care of in case of your unexpected death. Let us take a look at how you can claim tax benefits under section 80D term insurance in India.
#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
Section 80D of the Income Tax Act allows tax deductions for premiums paid towards health insurance policies. This provision encourages taxpayers to secure their health while enjoying tax savings. But did you know that term insurance with health-related riders can also qualify for deductions under 80D?
Typically, term insurance premiums are covered under Section 80C, which offers deductions of up to ₹1.5 lakh annually. However, premiums for health-related riders attached to your term plan—such as Critical Illness Cover, Surgical Care Cover, or Hospitalization Benefits—are eligible for additional tax deductions under Section 80D.
Term Plans
You can avail of the tax benefits with term insurance under 80D of the Income Tax Act by including important term insurance riders like critical illness riders to your base plan. Section 80D originally offered benefits in health insurance plans. Still, by including term insurance’s health riders into your base plan, you can receive tax benefits worth Rs. 75,000 on the total 80D term insurance premiums you paid in a year. You can claim the remaining premium amount under other sections of the Income Tax Act.
Moreover, certain Section 80D term insurance plans come with riders, like the critical illness rider, that offer extra benefits if the policyholder is diagnosed with a critical illness. Premiums paid for these riders qualify for tax deductions under Section 80D of the Income Tax Act, with a maximum annual limit of Rs. 25,000 for the policyholder, their spouse, and dependent children.
Secure Your Family Future Today
₹1 CRORE
Term Plan Starting @
Get an online discount of upto 10%#
Compare 40+ plans from 15 Insurers
Let’s understand the term insurance tax benefit 80D with the help of an example:
Rahul has purchased 2 term insurance plans and is paying a premium for these plans. One plan is for himself and the other one is for his spouse. Both of them are below 60 years of age and have added health riders like critical illness on their plan. Therefore, Rahul can claim term insurance tax benefits against the premiums paid u/s 80C of the ITA.
If Rahul had bought term insurance for his parents, who are above 60, they would have added health riders in their base term plan. Then, he could also claim term life insurance tax benefits up to 75,000 on the premiums paid.
In such cases, you can claim an extra Rs. 50,000 u/s 80D deduction. Overall, you can claim the benefit of term insurance under 80D up to Rs. 75,000/year.
Since the tax benefits for term insurance under 80D can only be claimed for health insurance plans, you need to ensure you only file for a claim under this section if your term life insurance qualifies for this deduction. You can do that by reviewing your plan details and assessing if you have any health riders like term insurance’s critical illness riders included in your base plan. If you are not sure you can also reach out to any financial adviser or your insurance providers to gain better clarity on this. Always be completely sure if your plan qualifies for this deduction as a wrong claim may result in you losing all the term insurance tax benefits altogether.
You can claim term insurance tax benefit 80D when you file for returns for tax deductions at the end of each assessment year. You can only claim tax deductions for term insurance under 80D if you have opted for a health rider such as critical illness, hospital cash, or surgical care rider along with your base term plan.
Here are some of the term insurance comes under which section. Some of the conditions under which the policyholder can make term insurance tax benefit 80D claims are as follows.
If the policyholder has chosen a critical illness term policy for him/her and his/her family (including his/her spouse and children). If the life insured along with his/her family member is below 60, then he/she has met the criteria for a tax deduction of up to Rs 25,000.
If the policyholder has opted for a similar and separate term policy for his/her parents and the life insured's parents are above 60 years of age, then the individual is eligible for tax deduction up to Rs. 50,000.
The limit of deduction is illustrated in the below table.
| Life stage | Premium amount paid | Upper limit to Term Insurance Tax benefit 80D | |
| For Self, spouse, and children | Parents and in-laws | ||
| Individuals (covered) under 60 years | Rs. 25000 | Rs. 25000 | Rs. 50000 |
| Your parents are >60 years | Rs. 25000 | Rs 50000 | Rs 75000 |
| When both you and your parents are >60 years | Rs 50000 | Rs 50000 | Rs 100000 |
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C applies.
The individual must consider the below clauses related to the deductions to understand term insurance comes under which section.
Suppose the individual's term insurance policy is issued on or after April 1, 2012. In that case, a tax deduction is applicable only for the total premium amount up to 10% of the maximum sum assured.
Suppose the applicant's term insurance plan is issued on or before March 31, 2012. In that case, a tax deduction is applicable only for the total premium amounting to a maximum of 20% of the sum assured.
Suppose the individual is suffering from any physical disabilities or critical illness. In that case, a tax deduction is applicable if the policyholder has paid premiums amounting to 15% or more of the total sum assured. The above clause is again applicable for an insurance plan that has been issued on or after April 1, 2013. Moreover, an individual of the Hindu Undivided Family (HUF) can also avail of the above tax benefits under this section.
Deductions can only be claimed by persons and a HUF i.e., Hindu Undivided Family on the premium amount being paid for their term insurance plans or on the benefits received by them. You can only claim tax benefits on insurance bought for
Yourself
Children
Spouse
Dependant Parents
Dependant in-laws
Any other party other than the ones stated above cannot claim this deduction. For example, a firm or a company cannot file for term insurance under 80D tax deductions.
Below is a list of the payments that are eligible for section 80D tax deductions:
Cashless payments for health insurance premiums or term insurance with health riders
Preventive medical checkup expenses
Treatment costs for a senior (over the age of 60) with no health insurance plan
Payments made for government programs and Central Government’s Health Scheme
As per the Budget 2024, it is proposed that TDS (Tax Deducted at Source) on Term Life Insurance Policies u/s 194A of the Act be reduced from 5% to 2%.
Insurers offer various term riders to enhance coverage, and these riders can offer additional term insurance tax benefits beyond just strengthening the coverage. You may be eligible for extra tax advantages depending on the term insurance rider you select and its associated terms. Here's how term plan riders can contribute to additional tax benefits:
Critical Illness Rider: When you add the Critical Illness rider to your term plan, you can qualify for Section 80D term insurance tax deductions of the Income Tax Act.
Return of Premium Rider: Opting for the Return of Premium rider when purchasing an 80D term insurance increases the premium amount. This can help you save more money on your tax liability under Section 80C. You can use an online term insurance calculator to understand how these riders affect the premium and your potential term life insurance tax benefits.
These riders enhance your financial protection and provide an opportunity to optimize your tax planning.
Here is a list of all the term insurance exclusions under 80D of the Income Tax Act, 1961.
Premium payment: If the policyholder does not pay premium amounts on a regular basis, the tax savings benefit will not be valid in these scenarios.
Group Health Insurance: Section 80D term insurance will not apply to group health insurance premiums, but if you make any additional payments to increase the sum assured, the term insurance tax benefit will apply to the extra amount paid.
GST: No tax benefits on the GST and CESS charges will be applied to the plan.
Apart from this, there are other exclusions also:
Also, it doesn’t apply to a premium paid on behalf of working/ employed children or other relatives.
It is not important if the premium amount is paid in cash.
Deductions under Section 80D are separate from those under Section 80C, enabling you to save more on taxes.
To claim these benefits, ensure that your policy explicitly mentions the health-related riders.
Maintain proper documentation of your premium payments for filing tax returns.
Term insurance plans can not only secure your family’s future, and help fulfill their goals, but also help you save on your yearly taxes. You can claim tax deductions of up to Rs. 75,000 with section 80D term insurance of the Income Tax Act. This section is only applicable to term insurance with health riders included in the plan. By understanding term insurance comes under which section you can not only secure financial security but also peace of mind from financial hardships.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Annual Renewable Term Insurance (ATR) is tailored for short-term
Read more
The ICICI Pru iProtect Super Plan is a pure-term insurance plan
Read more
Many people wonder about its tax benefits when purchasing a term
Read more
Studying abroad can be a life-changing experience, offering
Read more
The divide between rural and urban lifestyles in Tamil Nadu is
Read moreInsurance
Calculators
Payment Methods
Secured With
Follow us on
