A term insurance provides stability to a person’s family in their absence. The insured is required to pay a specific amount of premium. If the insured person loses their life, the nominee of the term plan receives a sum assured. The policy acts as a financial backup in case of the policyholder’s demise.
One can choose the plan they want by choosing the tenure of their choice. The type of plan depends on their financial obligations, dependents, and liabilities. Also, the needs of their dependents and liabilities also need to be considered before choosing a term plan.
Taxable term insurance payouts:
Section 80C of the Income Tax Act states that taxpayers can get a tax break on their premiums for term life insurance. An insured person may request up to Rs 1.5 lakh annually. One can evaluate the premium for the sum assured amount by using an online term insurance calculator.
There are also tax breaks for term premiums paid for the policyholder’s spouse and children under 18 years of age. However, only those who bought a policy before March 31, 2012, are eligible for the tax break. People who purchase insurance after April 1, 2012, will qualify for a 10% tax credit.
- If the insured person passes away, their family does not have to pay taxes on the payouts. They cannot consider taxable income. As per Section 10 (10D) of the Income Tax Act, the death benefit received due to the demise of the policyholder are exempt from taxes.
- The term insurance tax benefit claimed may be applied to settling other liabilities and debts. Depending on the number of premiums paid, the nominee may get more help if they have a significant corpus. The nominee gets several benefits as they receive the entire amount tax-free.
- The term insurance plan offers several benefits. Financial obligations relating to children, grandkids, and other relatives can be covered.
Using an online term insurance calculator provides the affordable premium amount you have to pay for the sum assured you need.
What are the term insurance plan tax benefits?
Apart from the claim of the policy, there are several tax benefits that you can receive. Here are other tax benefits of term insurance:
- Firstly, the claim benefit where the nominee gets a term insurance tax benefit claim under Section 10D of the Income Tax Act on the sum assured that they receive. If the policyholder loses their life, the maturity amount can be wholly forgiven, and no tax shall be deducted.
- Section 80C of the Income Tax AC says that an insured person can get a tax break on the payout after the term. Up to Rs. 1.5 lakh in tax benefits may be claimed annually. Additionally, the premium paid for the provider’s spouse is tax-exempt.
- The most popular type of insurance is term insurance, which can be ideal for those looking for detailed coverage without any extraneous features or risks. It is quite affordable compared to other insurance plans and offers the lowest premiums comparatively.
- Term insurance with return of premium (TROP) is a form of insurance in which the insurance company gives the insured person or their family credit after the policy’s term has ended. It is a legal contract between the insured and the insurer that says the insured must pay their premiums on time, and in exchange, the insurer can give them more money.
- The term length and premium payment determines the benefits of a term insurance policy. Before buying a policy, buyers can review all the different types of term plans and weigh each one. Along with the guaranteed payout, the insured and their families have a strong financial rock to rely on in form of a term insurance plan.
- The premiums for this policy are low and can be paid at any time, such as monthly, quarterly, and even with a single payment. The duration and type of premium payment you can choose to depend on your need. Regarding acquiring coverage, it offers affordable costs and additional tax advantages.
Term insurance provides security to the policyholder and their loved ones. Along with that, there are several tax benefits that the plan offers, making it a popular buy.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.