It is commonly believed that the start of the financial Year is the correct time to start tax planning.however,it is the march quarter when most salaried individuals undertake the process. Most of the people invest in tax saving products without evaluating their features and understanding their benefits.when comparing different instruments,it is always advisable to choose an option that offers the mutual of wealth protection, flexibility,value appreciation,and tax savings.
One of the many tax-saving instruments that people come across is life insurance.
Although the main objective of a life insurance policy is to provide financial protection for an individual in the face of uncertainities,it also acts as a rewarding tax shelter. Some of the preffered life insurance products include term plans,money back and whole life policies and ulips(unit linked insurance plans).term plans gives you the pure protection whereas others are a mix of insurance and investment.however,for availing tax benefit qually by the income tax department.
Lets understand tax benefits offered by life insurance products:
- Term plans gives you pure protection while others are a mix of insurance and invest.
- Life insurance has a additional EEE benefit.
One can avail a tax benefit by way of deduction towards premium paid on life insurance policies up to rs 150000 under section 80 c of the insurance Tax act, 1961.
This also icludes premium paid by the person for life insurance for his/her spouse or child.
Under section 80ccc, if one has taken any pension/annuity plan,he/she is allowed a deduction up to rs 1lakh .on maturity of the accumulated amount ,2/3rd of the income gets taxable,while the remaining 1/3rd is tax-free.