Taxes are an essential component of both personal and professional transactions. Taxes are important for a country's development and for public infrastructure.
India has always been a country which understands that inflations and a tax hike can hamper public morale so she gives the public certain tax exemptions. Most of these tax benefits are mentioned in the Income Tax Act, 1961. Specific sections in the Act, can inform one of the tax benefits they can enjoy on a variety of financial instruments.
Term Life Insurance policies are also instruments which enjoy tax benefits. The premium you pay towards a term policy and the death benefit availed by beneficiaries are both exempted from being taxed under Sec 80C and Sec10 (10D), respectively, of the Income Tax Act.
Term insurance is life insurance for a limited number of years and you can avail a tax benefit of up to a maximum of ₹ 1.5 Lakh on the premium paid for self, spouse and children. In case of an eventuality or at the time of maturity, the return on term insurance is only a death benefit which is also exempted from tax as long as premium does not exceed 10% of the capital sum assured. There are also separate conditions in case of disability.
Tax saving is a healthy financial exercise which helps boost your finances and term insurance policies are a great protection for your family against unprecedented events. Put together, term insurance tax benefits can help you build a steady portfolio.