Thinking of investing in insurance? These policies can help you save tax under 80C

Thinking of investing in insurance? These policies can help you save tax under 80C

New Delhi: When it comes to financial decisions, we generally tend to look for products that have “more” benefits. Insurance is one of those product categories that offer multiple benefits in a single investment.

Insurance products, which secure your future, also save taxes. But saving taxes shouldn’t be the primary goal of an insurance policy.

It would be helpful to consider tax saving options that can help make sound and informed decisions:

ULIP

It should be mentioned here that unlike mutual funds, the ULIP Maturity Amount is tax free under section 10 (10d). Even short-term gains made by the policyholder switching from one fund to another are tax exempt. This puts ULIPs in an advantageous position over mutual funds. In addition, the annual premium you pay for ULIP is eligible for a tax benefit under section 80C.

The investment or premium payments made for a ULIP are eligible for a tax deduction on an annual basis. The premium paid gives the right to a deduction under Article 80C as a tax saving investment. You can claim a deduction for paying premiums on a policy in your name or on behalf of your spouse or children. The deduction is within the overall limit of Rs 1.5 lakh per exercise.

In addition, the transfer of funds within a ULIP is not taxable. You can change according to your needs and the options available to maximize the benefits of the policy.

Term insurance plans

Term life insurance is a well-known product that you should include in your financial planning portfolio. The premiums you pay for a term life insurance policy to financially secure the future of your dependents are eligible for tax exemption under section 80C of the Income Tax Act. 1961.

The maximum amount that you can save by paying the premium under this section is Rs 1.5 lakh. Taxpayers can even reduce your taxable income by purchasing term life insurance for your parents, spouse and children.

The payment received by the nominee on the death of the policyholder is completely tax free.

Staffing policy

In addition to providing family protection coverage, an endowment policy is a life insurance policy that also allows you to save regularly over a specific period to get a lump sum when the policy matures if you survive. the period of the policy.

The premium you pay up to Rs 1.5 lakh is tax deductible and helps reduce the tax burden by lowering your taxable income. You can claim such a deduction under section 80C of the Income Tax Act.