Income Tax Benefit On Life Insurance – Section 80C And 10D


One of the most important and necessary elements of guaranteeing a stable financial situation and a comfortable life for your loved ones is a life insurance plan. Even without you, your family can create a secure future with the capital benefits of life insurance. Also, there are income tax advantages for purchasing life insurance under Sections 80C and 10(10D) of the Income Tax Act.

A life insurance policy’s premiums can be written off under Section 80C up to a maximum of 1.5 lakh, and Income on Maturity is tax-free under Section 10(10D) if the premium does not exceed 10% of the sum assured or the total assured is at least 10 times the premium. A life insurance calculator is a tool you may use online to determine the amount of coverage required based on your needs.

However, you will receive a premium concession of up to 10% of the sum promised if the total assured is less than ten times the premium, such as when you pay Rs. 1 lakh in premium for Rs. 5 lakh in the sum assured. Your deduction in the example will be Rs. 50,000 instead of Rs. 1 lakh.

Also, the assured payment given to the nominee remains tax-free in the event of passing away. Nonetheless, the income will be taxed at the marginal tax rate upon maturity because the insurance does not meet the requirements for the income tax advantage. The life insurance calculator is easy to use and is beneficial if you want to buy a life insurance policy.

According to Section 80C, tax deductions are available for premiums paid for life insurance policies up to Rs. 1,50,000 as long as the total premium paid during the financial year equals 20% of the policy’s sum assured. Only life insurance policies issued before March 31, 2012, are covered by this. For policies issued after 1 April 2012, tax deductions are available for premium payments that total 10% of the sum assured in a given fiscal year.

According to section 80C(5), the insured will not get any benefits on the premium paid, suggested under section 80C of the Income Tax Act, if the insurance policy holder voluntarily surrenders his policy or in the event the policy is cancelled before 2 years from the date of the beginning of the policy. The sum assured amount plus bonus (if any) paid upon surrender or maturity of the policy or in the event of the insured’s passing away is completely tax-free for the receiver under Section 10(10D) of the Income Tax Act, 196. The following are some of the key points of section 10(10D) of tax deductions:

Any sum paid to the insured under a life insurance plan is deductible from income. The amount due may include maturity benefits, death benefits, bonus amounts allotted, surrender values, and survivor benefits. Gains and proceeds from ULIPs are subject to Section 10(10D) deduction, and the advantage on maturity proceeds is provided where the premium paid for the policy does not exceed 10% of the guaranteed sum.

Any life insurance policy maturity amount or bonus amount obtained by the beneficiary of the policy if the insured passes away is completely exempt from the tax deduction. If the maturity proceeds reach Rs. 1 lakh, a tax deduction at source (TDS) will be necessary to maintain compliance. The insurer will remove 1% as TDS (Tax Deducted at Source) provided the policyholder’s PAN is known.

Life insurance policies are an essential investment for individuals as they provide financial protection to their families in case of their unfortunate demise. However, in addition to this primary benefit, life insurance policies also offer life insurance tax benefits under Section 80C and 10D of the Income Tax Act.

Under Section 80C, an individual can avail of a deduction of up to Rs. 1.5 lakh from their taxable income for the premiums paid towards a life insurance policy. This deduction can be availed of by investing in various life insurance policies, such as term plans, endowment plans, and Unit Linked Insurance Plans (ULIPs). This deduction is also available for policies purchased in the name of an individual’s spouse and children. Moreover, the maturity amount or death benefit received from the life insurance policy is also exempt from tax under Section 10D. This exemption is available for all life insurance policies, including endowment plans, term plans and ULIPs.

In addition to these life insurance tax benefits, life insurance policies also offer a host of other benefits such as loan facility, surrender value, and riders such as critical illness, accidental passing away, and disability cover.

* Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.


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