Top Term Insurance Policies Eligible for 80C Tax Benefits in 2025

Income Tax Benefits of Term Insurance

Individuals purchasing term insurance can claim tax benefits under three different sections of the Income Tax Act of 1961. The benefits under these sections are as follows:

Section 80C

Section 80C of the Income Tax Act of 1961 lets an individual claim up to ₹1.5 lakhs in tax deductions against the premiums that are paid towards a life insurance plan. Section 80C offers a high tax deduction limit. Some of the important highlights of this section are:

• It is essential that the total premium payable does not exceed 10% of the total sum assured amount of a term insurance plan. For instance, if the policy's sum assured amount is ₹1 crore, the total premium payable must not exceed ₹10 lakhs

• In case the premium exceeds the limit of 10% of the sum assured, the individual can claim tax deductions on a proportion basis

• There is no tax benefit applicable in case the individual voluntarily exits the policy

• If the policy gets terminated within 2 years of the date of purchase, the tax benefits shall not be offered.

Section 80D

Section 80D of the Income Tax Act of 1961 is also applicable for term insurance policy paid. Usually, Section 80D benefits are applicable to health insurance policies, but in some cases, it can also be applicable to term insurance policies. Following are the details regarding Section 80D tax benefits of the Income Tax Act of 1961:

• Individuals who have purchased add-ons along with term plans like hospital care rider, critical illness cover, or surgical care can also claim Section 80D deductions

• Individuals can claim tax deductions of up to ₹25,000 under Section 80D of the Income Tax Act of 1961

• People who have purchased term insurance for their parents can claim an additional deduction of ₹25,000

• For senior citizens, the tax deduction amount under Section 80D of the Income Tax Act of 1961 is ₹50,000.

Section 10(10D)

Section 10(10D) of the Income Tax Act of 1961 is yet another essential part to understand. This section of the income tax benefit is related to the death benefit and surrender value. The following are the details:

• In case the life assured dies during the policy tenure, the nominee receives the guaranteed death benefit. This death benefit is exempted from tax deductions

• Any incentives received or the surrender value in a term insurance policy is also exempted from tax deductions.

Note: Individuals or Hindu Undivided Family (HUF) can claim tax benefits under Section 80D for premiums paid for term insurance add-ons.

Who Can Claim Income Tax Benefits Under Term Insurance?

The Income Tax Department of India has specified the eligibility criteria required for claiming term insurance tax benefits. So, it is essential for individuals to fulfil these requirements in order to avail of the income tax benefits:

1. Indians and Hindu Undivided Families (HUFs) are eligible to claim tax benefits under the Income Tax Act of 1961
   
2. There are different tax slabs in India. Those who fall under tax slabs can claim income tax benefits under the Old Tax Regime.
   
3. Senior citizens, too, are eligible to claim income tax benefits for term insurance premiums paid
   
4. The individuals claiming income tax benefits for term insurance must have a term plan registered under their or their spouse's name. People may claim tax benefits for policies registered under their children's names.

Conclusion

Availing of tax benefits is what everyone aims for. Not only does it help you reduce the income tax burden, but it also encourages you to purchase meaningful products like term insurance plans. By purchasing a term insurance policy, you can easily avail yourself of term insurance tax benefits under various Sections of the Income Tax Act of 1961, like 80C, 80D, and 10(10D).

Not just for you, but the policies you purchase for your parents are also eligible for tax benefits. So, start planning your yearly finances and investments in advance for a sound financial year. At Jio Insurance Broking, we are here to assist you in this journey. Search among a range of products available at Jio Insurance Broking and compare these to get yourself the most suitable insurance policies!