Insurance is not just an agreement on paper but a shield for the financial security during the worst of times. When you buy life insurance, it ensures that if something happens to you, your family does not have to face financial difficulties. On the other hand, health insurance protects your savings by taking care of sudden medical expenses, so that you do not have to worry about money in case of a serious illness or accident.
Now, look at it from another perspective — when this security also gives you the benefit of tax exemption under sections 80C, 80D and 10(10D) of the Income Tax Act, it becomes a wise investment and not just an expense. Insurance not only supports you in bad times, but also strengthens your long-term financial planning. It helps you invest your money in the right direction, reduce your tax liability, and become financially independent in the future.
The month of March reminds us that the financial year is coming to an end and we need to have a concrete investment and tax-saving plan ready. There are a range of tax-saving options available under the Old Tax Regime which not only help you grow your savings but also help in saving on taxes. In this story, Pankaj Nawani, CEO, CarePal Secure, talks about various tax-saving options that can be used via investing and buying insurance products.
As the financial year draws to a close, policyholders should take full advantage of the tax benefits offered under the Income Tax Act of 1961 to maximise their savings, suggests Nawani.
Also read: Bajaj Allianz Life becomes first insurer to go live with Bima-ASBA facility
Here’s a breakdown of how different insurance policies can help reduce tax liability:
Life Insurance
Under Section 80C, policyholders can claim deductions of up to Rs 1.5 lakh annually, based on the policy’s sum assured and issuance date. “Additionally, Section 10(10D) ensures that maturity proceeds, death benefits, and bonuses remain tax-free — so long as premium limits are adhered to. However, for ULIPs, the tax exemption applies only if the annual premium is below Rs 2.5 lakh,” according to Nawani.
Health Insurance
Taxpayers can claim deductions under Section 80D — Rs 25,000 for premiums covering self, spouse, and children, and up to Rs 1 lakh if both the policyholder and their parents are senior citizens,
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