Tax Saving Life Insurance Plans
How to save income tax with Life Insurance Plans?
Under the Income Tax Act (1961), you can save tax on your hard earned money by using our Life Insurance products and solutions. You can get tax advantages at different stages of the policy.
- Stage 1: Entry Advantage – You receive tax benefits on your premium payments under Section 80C (life insurance), 80CCC (pension) and Section 80D (health)
- Stage 2: Earnings Advantage – Your investment with us gets the potential to grow and is not currently taxable~
- Stage 3: Exclusive Switching Advantage – You can switch between equity, debt and balanced funds anytime and these switches are not taxable
- Stage 4: Exit Advantage – You receive a taxfree Maturity Benefit (the payout you receive when your policy ends) subject to conditions of Section 10(10D) of the Income Tax Act (1961)
Tax benefits^ offered under the Income Tax Act, 1961:
Section 80C:You can claim a deduction from your taxable income on account of premium paid towards life insurance for self, spouse or children. You will be allowed a maximum deduction of up to 1.5 lakh.
Section 10(10D):The returns earned from Life Insurance policies are tax-free subject to conditions of Section 10(10D) of the Income Tax Act (1961).
Details of plans eligible for tax benefits under Section 80C and 10(10D):
|Section 80C, 80D||ICICI Pru iProtect Smart||105N151V06||Term Plan||Yes
|Section 80C &
|ICICI Pru Signature||105L177V01||ULIP Plan||No
|ICICI Pru1 Wealth||105L175V01||ULIP Plan||Yes
|ICICI Pru LifeTime Classic||105L155V03||ULIP Plan||Yes
|ICICI Pru Cash Advantage||105N132V01||Money Back Plan||Yes
|ICICI Pru Savings Suraksha||105N135V01||Endowment Plan||Yes
|ICICI Pru Future Perfect||105N153V01||Endowment Plan||Yes
|ICICI Pru Assured Savings Insurance Plan||105N144V06||Endowment Plan||Yes
|ICICI Pru Sarv Jana Suraksha||105N081V03||Rural Plan||No
Section 80CCC:You can get tax benefits on premium paid up to 1,50,000/- towards pension/retirement policies. However, if you surrender the plan, the pension/annuity received will be taxed as per the existing tax laws.
Section 10(10A):1/3rd of the payment that you receive under pension plan at the time of retirement is also tax free. This is known as commutation.
Please refer to the table below to view the details of plans eligible under Section 80CCC and 10(10A)
|Section 80CCC & Section10(10A)||ICICI Pru Easy Retirement||105L133V02||Retirement Plan||Yes
Section 80D:You can get tax benefits on premiums paid in any mode, other than cash towards health insurance policies taken for yourself, your spouse, your dependent children and your parents. The maximum tax benefits under Section 80D are as follows:
- Tax benefit on premium paid up to 25,000 for yourself, your spouse or your dependent children (Limit is 50,000 if the age of insured* is 60 years old or more)
- There is an additional tax benefit on health insurance premium paid up to 25,000 for covering parents (Limit is 50,000 if the age of insured* is 60 years or more).
Please refer to the table below to view the details of plans eligible under 80D
Section 80CCE:Under this section, the overall limit of deduction from taxable income to get tax benefits under Sections 80C, 80CCC and 80CCD(1) is 1,50,000/-.
1. Where can I invest to save tax?
You can invest in a Unit Linked Insurance Plan (ULIP) to save tax. The ULIP premium amount can be deducted from your taxable income, thus lowering your taxes. To calculate how much you need to invest in ULIP to save tax, use this calculator:https://www.iciciprulife.com/insurance-guide/financial-planning-tools-calculators/income-tax-calculator.html
2. How much should I invest to save tax?
Under Section 80C of the Income Tax Act, you can lower your taxable income by investing upto ₹ 1.5 lakh in ULIP premium per financial year. This investment can allow you to save up to ₹ 46,800^^ taxes per year.
3. Is ULIP a good tax saving investment?
The three-fold continuous tax benefits make ULIP a good investment instrument when it comes to saving tax. Firstly, ULIP premium paid upto ₹ 1.5 Lakhs under Section 80C^^saves tax. Secondly, fund switches in a ULIP attract no tax. Thirdly, the money you receive at ULIP withdrawal and maturity is tax-free subject to provisions of section 10(10D)^^.
4. How to plan your tax* saving investments for the year?
You can save tax* on premiums paid towards life insurance, retirement accounts, and more subject to section 80C of the Act. You can also invest in many other types of investments, such as FDs, SIPs, etc.
5. How to choose the right tax* saving investment plan?
Apart from just looking at the tax* saving aspect, it is also necessary to consider the benefits of the investment for you and your family. This is why products like life insurance, ULIPs, endowment plans, annuity plans, etc. are some of the tax* saving tools you can opt for.
6. How many tax* free instruments can one have?
You can have as many tax* free investments as you like as there is no limit on it. However, the deduction can be availed up to the limits specified under various sections of the Income Tax Act, 1961. Different income tax sections can have different limits of deductions.
7. How can I reduce my taxes* legally?
You can buy life insurance, invest in a pension plan, or put your money in savings plans such as an endowment or annuity plan. You can also invest in ULIPs. These are all great ways of legally reducing your taxes* while also building a corpus for urgent times and future needs.
8. How to see how effective your tax* free instruments are?
Tax* saving instruments should also serve other purposes apart from saving tax*. To ensure that they are effective, you should look at diverse aspects, such as liquidity, safety, returns, flexibility, the cost of investment, etc. The ultimate aim of an investment should be high returns and easy accessibility along with tax* savings.
^^Tax benefits of ₹ 46,800 u/s 80C is calculated at the highest tax slab rate of 31.20% (including cess excluding surcharge) on life insurance premium u/s 80C of ₹ 1,50,000 . Tax benefits are subject to conditions under Section 80C,10(10D),115BAC and other provisions of the Income Tax Act,1961. Good and Services Tax and Cesses, if any will be charged extra as per prevailing rates. Tax laws are subject to amendments made to it from time to time. Please consult your tax advisor for details.
^ Tax benefits under the policy are subject to conditions under Section 80C, 80D, 80CCC, 80CCE, 10(10D), 10(10A) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.
~Please note: The tax write-up above is for general understanding and reference. You will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting based on the above information. Tax laws are subject to amendments from time to time. ICICI Prudential Life Insurance Company Limited expressly disclaims any liability to any person, if tax benefits stated above are denied to the customer.
Unlike traditional products, Unit linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns. COMP/DOC/Nov/2020/1711/4810