Term Insurance is a pure protection plan that offers coverage against an unfortunate event during the policy term. One of the most significant advantages of a term plan is the tax^{^} benefit associated with it. Term Insurance Tax^{^} Benefits can provide you with increased savings and better earnings. Read on to know more.

Term Insurance Tax Benefits^{^} under Specific Sections of the Income Tax Act, 1961

As mentioned above, there are several term insurance tax benefits^{^} that you can avail of. Following are a few of them:

• Term Insurance Tax^{^} Benefit under Section 80C

  - The premium paid towards a term life insurance plan is eligible for a deduction according to Section 80C^{^} of The Income Tax Act, 1961. You can claim a deduction up to ₹ 1.5 lakh per annum. Section 80C also includes other investments, including the National Pension Scheme (NPS), Atal Pension Yojana, Equity Linked Savings Scheme (ELSS), pension plans issued by insurance companies, Unit Linked Insurance Plan (ULIP), tax saving Fixed Deposit (FD), Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), among other.

• What are the conditions to avail term insurance tax^{^} benefits under Section 80C

  - Below are some conditions you must meet to qualify for term insurance tax benefits under Section 80C^{^} of The Income Tax Act, 1961:
  • (a) The annual premium paid towards life insurance should not be more than 10% of the sum assured. If the premium for your plan is more than 10%, the tax deduction will be applied proportionately
  • (b) If your life insurance policy was issued before 31st March 2012, the tax deduction will be applied only if the yearly premium does not exceed 20% of the sum assured
  • (c) You cannot claim a deduction on the premium payment if you voluntarily surrender or terminate a policy two years from the date of purchase

• What are the conditions to avail of term insurance tax benefits under Section 10(10D)

  • You can claim tax benefits on a term plan only if the premium paid is lower than 10% of the sum assured and the sum assured is at least ten times the cost of the premium.

• Term Insurance Tax Benefit under Section 80D

  - Section 80D^{^} of The Income Tax Act, 1961 offers deductions on health insurance premiums. You can claim up to ₹ 25,000 on premiums paid towards a health plan. The tax benefit can also be extended for a plan taken for a spouse, children and parents. Here's how this applies to different policies:
  • You can claim a deduction of ₹ 25,000 for a plan for yourself, children and spouse below the age of 60
  • You can avail of a deduction of ₹ 25,000 for a plan for parents below the age of 60
  • You can claim a deduction of ₹ 50,000 for a plan for yourself, children and spouse above the age of 60
  • You can apply for a deduction of ₹ 50,000 for a plan for parents above the age of 60
  • Members of Hindu Undivided Families (HUF) below 60 can claim a deduction of ₹ 25,000
  • Members of HUF above 60 can claim a deduction of ₹ 50,000