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Term Insurance Tax Benefit Under Section 80C

With tax season fast approaching, it’s the perfect time to explore ways to optimise your savings while safeguarding your family’s future. Term insurance is a smart financial tool for providing security to your loved ones and an excellent way to reduce your tax liability. Under Section 80C of the Income Tax Act, of 1961, term insurance offers significant tax benefits, making it a must-have in your financial portfolio.

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Is Term Insurance Covered Under 80C?

Yes, term insurance is covered under Section 80C, which allows you to claim deductions on the term insurance premiums paid. The section 80C life insurance is one of the most popular tax-saving sections, allowing deductions of up to ₹1.5 lakh in a financial year. However, it is important to note that you can claim tax benefits as term insurance comes under sections 80C and 80D of the IT Act, 1961. However, it is important to note that term insurance comes under 80C and 80D, only if you still follow the old tax regime, as the new tax regime does not provide term insurance tax benefits under these sections.

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How Does Term Insurance Under Section 80C Help You Save Taxes?

Term insurance under 80C allows you to save on yearly taxes, as the premiums you pay for different types of life insurance are eligible for tax deductions. You can claim tax deduction of up to ₹1.5 lakh annually on the premiums paid for term insurance under 80C.

Should I Opt for Term Insurance 80C or 80D Benefits?

A term insurance policy offers tax benefits under 80C and 80D in the following ways:

Term insurance under Section 80C, offers tax deductions for the premiums paid towards keeping the term insurance policy active.
Term Insurance under Section 80D is applicable only for term insurance policies with health riders like critical illness, terminal illness, or hospicare riders, where deductions are available for health rider-related premiums.

Key Points to Remember:

The term insurance 80C deduction can provide a maximum of ₹1.5 lakh tax benefits per year, therefore, insurance advisors suggest keeping premiums within the 1.5 Lakh limit.
The term insurance under 80C tax deduction is available only if the total premium paid does not exceed 10% of the sum assured.
You should always keep records of the 80C life insurance policy and premium payment receipts.
When filing your income tax returns, report these premiums under the "Deductions" section and submit necessary documentation if required.

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Wrapping it Up!

Term insurance under 80C not only secures your family's future but also helps you save on taxes. By opting for term insurance, you can enjoy peace of mind, knowing that your family will be taken care of in your absence and benefit from significant tax savings with term insurance 80C.

FAQ's

Is term insurance covered under Section 80C?

Ans: Yes, term insurance is covered under Section 80C of the Income Tax Act, allowing you to claim tax deductions on the premiums paid.
Does term insurance come under Section 80C or 80D?

Ans: Term insurance comes under both sections 80C and 80D. With 80C term insurance, you can claim tax benefits on the premiums paid and with 80D term insurance you can claim tax benefits on the premiums paid towards the health riders in term plan.
What is the tax benefit for term insurance under 80C?

Ans: Under 80C, you can claim a deduction of up to ₹1.5 lakh annually on the premiums paid for your term insurance policy.
Is term insurance included in the ₹1.5 lakh limit under 80C?

Ans: Yes, the premium paid for term insurance is included in the overall ₹1.5 lakh limit for Section 80C term insurance tax deductions.
Can I claim tax benefits on term insurance premiums?

Ans: Yes, you can claim tax benefits on term insurance premiums under Sections 80C, 80D, and 10(10D).
What is the difference between 80C and 80D for insurance?

Ans: The difference between term insurance under 80C or 80D is that, 80C term insurance provides tax benefits on the term insurance premiums paid, whereas 80D term insurance offers tax benefits only if the term insurance includes health riders in the base plan.
Do I have to pay GST on term insurance plan u/s 80C?

Ans: GST is levied according to applicable premium rates; GST and other cesses are separate from section 80C life insurance benefits.