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Term Plans+Tax Benefits = Your Family’s Financial Security in 2024

Term Plans+Tax Benefits = Your Family's Financial Security in 2024[1]

Do you think term insurance only provides life protection? That’s just one way of looking at it. Beyond its primary function, it also provides tax benefits to the insurers. These plans offer various benefits under the Income Tax Act. This added facility has noticeably increased the popularity of term plans.

People in the earlier times were sceptical about investing so much for so long. However, nowadays, the approach has changed due to the array of advantages available.  This article will detail the term insurance tax benefit per the Income Tax Act. Read along to know more.

What Are The Tax Benefits On Term Plans?

The tax benefits of these policies are both in the sum assured and the payout. This advantage has helped many people to save from their plans and afford a better lifestyle for their families. Here, we will look at the three sections of the Income Tax Act 1961 and how it has helped common people.

      Section 80C

Section 80C of the Income Tax Act allows individual taxpayers to save on taxes. The candidate can avail themselves of up to a 1.5 lakh tax deduction on their insurance premiums.

●.     Section 10(10D)

Under Section 10(10D) of the Income Tax Act, the money the designated person receives upon the policyholder’s death is tax-free. Similarly, the sum assured upon maturity is also tax-free; however, certain conditions must be fulfilled.

      Section 80D

Term insurance policyholders can avail of tax benefits under Section 80D of the Income Tax Act. Although Section 80D of the Income Tax Act primarily allows tax deductions on premiums paid for health insurance policies, term insurance policyholders with additional riders like Critical Illness and Surgical Care cover can still benefit.

A Quick Glance Through The Different Types Of Term Plans

As the era evolves, people demand more personalised insurance plans to cater to their numerous demands. Since investing in such plans is quite an important approach, various companies have come up with different plans that can serve a variety of demands. Let us look at the nine popular options for you to choose from.

  • Regular Term Insurance: This is the standard version of the plan. Where you pay a fixed premium for a given time and get life coverage.
  • Increasing Term Insurance: The sum assured increases by a certain percentage each year. This helps the insurer keep up with rising expenditures.
  • Decreasing Term Insurance: The coverage amount decreases once your financial burdens lessen. This is best for those who are paying off loan debts. As the loan amount reduces, the coverage also decreases.
  • Return Of Premium Term Insurance: As the name suggests, this is for those who have lived beyond maturity. In this case, you will get all the premiums refunded. However, this only applies to those who have outlived the term.
  • Convertible Term Insurance: This flexible plan is best for those planning to invest from early on. You can start with a regular term plan and convert it to an insurance plan at your convenience. This is quite popular among the present generation.
  • Term Insurance With Riders: Riders have additional coverage that covers critical illness, disabilities, accidental death, etc. They provide extra protection for such situations. In case the insurer is suffering from deafness, terminal illnesses, the final stage of lung or liver, loss of speech, third-degree burn, etc., opting for this option is advisable. 
  • Group Term Insurance: If you are seeking a holistic way to secure the future of your employees, then this is the best option. It comes in a package and covers multiple people. The premiums, in this case, are comparatively lower.
  • Joint Term Insurance: This option covers couples under a single policy. If anyone succumbs to an accident, the other partner can take advantage of the benefits. It is a convenient plan for parents with children or kids living abroad. It not only secures your future but makes you more independent.
  • Term Insurance For Single Parents: This is a dire necessity for all single parents as this plan ensures that the child’s financial needs are met in case of mishaps. Single parents are encouraged to invest in such plans to protect their children from any financial disruption in their absence.

Ending Notes

The tax benefits on term plans are quite lucrative; hence, you should immediately invest to avail yourself of those benefits. Additionally, securing the future of your loved ones is equally important; hence, without further delay, invest in a suitable term plan.

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