HOW TO MAKE THE MOST OF TAX BENEFITS FROM LIFE INSURANCE, PENSION AND HEALTH.

Life Insurance plays a critical role in tax-planning. By investing in a life insurance plan, you can claim deductions from your taxable income as per the provisions of the Income Tax Act, 1961. This means that the insurance premiums you pay, help in reducing your tax liabilities.

In case of some life insurance products, maturity proceeds also come under exempted incomes. This means, no tax is payable on the benefits received on maturity or on death, subject to provisions of Section 10(10D). Hence, life insurance products are one of the best ways to ensure that your family is always protected while enjoying tax benefits.

Important Sections:

  • Section 80C: You can claim deduction of life insurance premium paid from your taxable income as per the provisions of Section 80C. Actual deduction is restricted to 10% of the minimum capital sum assured or premium paid, whichever is lower. Further, the overall limit of deduction available under Section 80C is `1,50,000/-.
  • Section 80CCC: You can get deduction from your taxable income towards premium paid for Pension policies up to a limit of `1,50,000/-. Surrender of the Plan or Pensions/ Annuities received are taxable as per prevailing tax laws.
  • Section 80CCE: Under this Section, the overall limit for deduction under Sections 80C, 80CCC and 80CCD(1) is `1,50,000/-.
  • Section 80D: You can get deduction of premium paid towards health insurance policies taken for self, spouse, dependent children and parents. Limits are as follows:

    1. `25,000 deduction is allowed for self , spouse and dependent children (Limit is `30,000 if the age of insured is 60 years or more)
    2. Additional deduction of `25,000 towards health insurance premium paid for covering parents (Limit is `30,000 if the age of insured is 60 years or more).
  • Section 10(10D): Proceeds from Life Insurance policies are exempt, subject to conditions of Section 10(10D).
  • Section 10(10A): Payment received on commutation of a Pension policy is exempt from tax.

Please note: The Tax write-up above is for general understanding and reference. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of 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. W/II/127/2015-16.

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