Did you know term plans can help you create wealth? Learn how!

If you’re planning to save some money on tax this year, we can help.

To begin, make a list of all your medical bills and expenses. If there are any medical bills or fees that you can claim as a deduction, make sure you do so before filing your taxes. You may be eligible for deductions on medical expenses, tuition fees, or any other expense related to your job.

After making your deductions, you might have a bit of money left over. Here’s how to save tax in India. Term insurance is one of India’s best ways to save tax because it offers tax benefits to its policyholders. People purchase term insurance policies mainly because they offer tax benefits such as exemption from wealth tax and income tax on the policy’s maturity value.

In this article, we will discuss what a term plan is and how they can help save taxes.

What are term plans?

Term insurance is a form of life insurance that provides coverage for a set period. It’s simple and affordable and can be an excellent way to protect your family’s financial future.

You can get extra benefits by adding riders to your policy, like accidental death and dismemberment coverage or a waiver of premium rider that allows you to stop paying premiums on your plan if you become disabled. And because term insurance has no cash value, there’s no need to worry about paying dividends for years and years after you’ve passed away.

Term insurance plans don’t have cash value but offer tax benefits when investing in them.

Benefits of Term plan

The advantages of having term insurance coverage are as follows:

• Affordable Premium with High Sum Assured
• Simple to comprehend
• Various Options for Death Benefit Payment
• Further Riders
• Income Tax Advantages
• coverage for critical illnesses
• Coverage for Accidental Death Benefits
• Premium Option Refund

Term plan’s Tax benefits

Term Insurance Tax Benefits Under 80C

One of the most popular questions on how to save tax in India is answered by Section 80C of the Income Tax Act. The maximum deduction allowed by this section for the investments and instruments listed in the IT Act is Rs. 1.5 lakh. Along with repayments for home loans, children’s coaching costs, insurance premiums, etc., these tools like PPF, ULIP, and ELSS are included.

Receiving a term insurance benefit under section 80C is subject to the following conditions:

• The annual premium payment cannot exceed 10% of the amount insured. The deductions will be made proportionately if the premium amount exceeds 10%.

 

• The deduction only applies to plans issued before March 31, 2012, and only if the premium does not exceed 20% of the total guaranteed.

 

• Policies voluntarily terminated or surrendered before the period of two years from the date of issuance was up would not qualify for the Section 80C tax benefits for term plans.

Term Insurance Tax Benefits Under 80D

The policies relating to health insurance are covered by Section 80D, which was created specifically for them. It reduced the amount of health insurance premiums paid for a person’s self, spouse, kids, or parents. The deduction thresholds vary depending on the circumstance.

The Critical Illness, Surgical Care, Hospital Care Rider, and other benefits are covered by term insurance under section 80D.

Specific criteria apply to Section 80D tax benefits for term plans, including:

• The deduction cannot be for more than Rs. 25,000.

 

• Senior citizens who are policyholders may also be eligible for an additional Rs. 25,000 in benefits. The tax-benefit value can rise by as much as Rs. 50,000 for senior folks.

Term Insurance GST Exemption

GST fees vary based on the term plan. The standard GST rate for a basic insurance plan is 18 percent. The deductions and term plan tax benefits available on the total annual insurance premium amount paid are discussed in Section 80C of the IT Act of 1961. Therefore, Section 80C applies when the GST is charged on the term insurance premium.

As an example, if the annual premium totals Rs. 15,000, the GST imposed would be Rs. 2,700. Therefore, the maximum amount of tax deductions claimed under Section 80C of the IT Act of 1961 is Rs. 17,700.

The Beneficiary’s Tax Liability

In some circumstances, the policyholder can be required to pay taxes. The tax amount is then maintained with the insurance company, and interest is accrued if the beneficiary chooses not to have the tax deductions paid out directly. Under the IT department’s scrutiny, the entire interest amount then turns into a tax attracter.

How to calculate term insurance premium

Term insurance is one of India’s most preferred ways to save on tax. It is the most common way of saving on tax because it is easy and convenient. However, before you select a term plan, calculate the term insurance premium with the help of a term insurance calculator and know how much you have to pay for it to secure a promising future for your family.

What is a Term Insurance Calculator?

A term insurance calculator helps you calculate the premium you need to pay to secure your life and other people covered under your policy. If you are looking for a quick way to calculate your term insurance premium, then using this calculator will be very helpful. It can also help you understand how much money can be saved by investing in a term plan instead of investing in other investments such as stocks or mutual funds.

What is the purpose of a term insurance calculator?

With the help of a term insurance calculator, you can estimate the insurance coverage and the premium you will need to pay to provide financial security for your family in an emergency. The coverage you select must be sufficient, and the price must be reasonable. Now, several variables will determine the required premium. The more life insurance you want and the longer the policy—plus any add-ons—the higher premium you’ll pay.

Conclusion – 

Term insurance is outlined to protect for a specific period and is designed to cover funeral and other family expenses.

While a term insurance policy offers tax exemption, it is suggested that you consult a financial advisor on how to save tax in India. This will enable you to make an informed decision because the benefits may vary per the tax brackets.

If you choose term life insurance, you’ll be able to compare different life insurance plans online and see all your options.