Why Insurance Under 80C is a Smart Investment for Your Future?

1. Tax exemptions include that portion of your income that has no tax liability and is not included in your total earnings or income.
2. Tax deductions reduce your tax liability. In life insurance, tax deductions allow individuals to save taxes by subtracting their premiums (up to ₹1.5 lakhs) from their total income.

Now, let us take a look at the tax benefits that you can avail yourself of.

1. Section 80C
   This section helps individuals save on taxes against the policy premiums of life insurance. You may claim a maximum tax deduction of ₹1.5 lakhs on the premiums paid on an annual basis.
2. Section 80CCC
   A subsection of 80C, Section 80CCC, allows the eligibility of individuals for tax deductions on the premiums of particular pension or retirement plans. In case you choose to surrender the scheme, the received amount will be taxed as your income.
3. Section 80D
   Section 80D allows individuals to save taxes on health plans. You may also avail this tax benefit on policies taken for your spouses, kids, or parents. A maximum benefit of up to ₹25,000 can be claimed a year, and this may go up to ₹1 lakh, given the insured and their parents are more than 60 years old.
4. Section 10(10D)
   This section allows you to enjoy tax exemptions on payouts of proceeds of your insurance after their maturity. This is generally applicable for all kinds of proceeds, be it death or maturity benefits. While death benefits are tax-free, maturity benefits are taxable in several cases.
5. Section 80CCE
   Section 80CCE of the IT Act, 1961, limits the deductions to not more than ₹1.5 lakhs under different sections like 80C, 80CCC, and 80CCD(1).

Important Things You Need to Note

1. ULIPs with premiums over 10% of the sum assured or annual premiums above ₹2.5 lakh may be included under the proposed changes.
2. For a life insurance plan bought after 1st April 2012, the maturity proceeds are exempt from tax provided the annual premium does not exceed 10% of the sum assured during the premium payment term.
3. If you receive more than ₹1 lakh from a life insurance policy that isn’t exempt under Section 10(10D), the insurer will deduct TDS at 5% before making the payment. This also applies to bonus payouts.
4. For amounts below ₹1 lakh, no TDS will be deducted, but the entire amount will be taxable. You can claim credit for the deducted TDS in your Income Tax Return.

Why is Life Insurance a Smart Investment?

In addition to life insurance tax benefits, there are a variety of other benefits that make life insurance a smart choice.

1. Income Replacement
   Income replacement is one of the common benefits offered by life cover. Life insurance ensures your family is protected and has a reliable source of income in the form of a lump sum amount in case something unexpected happens. What makes them unique is that they are cost-effective and reliable at the same time.
2. Clear the Debts
   By choosing the right life insurance, you choose to secure your family from any kind of debt. The right amount can help settle different kinds of loans, including education loans, home loans, and so on. Choosing the right assured amount is important to make sure your family does not have to struggle to clear off debts in your absence.
   Note: Several types of life insurance plans qualify you for taking a loan against the policy.
3. Helps You Save Against Taxes
   One of the prominent benefits that make life insurance a smart choice is its tax benefits. From the premiums that you pay to the payout received, different types of tax benefits are applicable.
4. Gives You Peace of Mind
   Another benefit that makes life insurance a smart decision is that it allows you to have peace of mind. You need not keep worrying yourself with questions like who will be there to take care of your family or you. Or how are they going to manage expenses if you're not around anymore? With the right life insurance and the right coverage, you can choose financial security for your loved ones and peace of mind for yourself.

Final Word

All in all, now you know how life insurance under 80C comes with a variety of tax benefits. However, life insurance tax benefits cannot and should not be the sole reason to invest in these policies. Instead, you must be clear about your financial goals, income, affordability, requirements, and more to choose a suitable policy that works best for you.

At Jio Insurance Broking, you get a diverse range of options to choose from, meaning you choose a plan that best matches your goals and risk appetite. With a customer-friendly approach, you get personalized suggestions that make your experience even better. So, why wait when you can make the most out of your investment? Begin your journey today with Jio Insurance Broking.