The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
Are proceeds paid under a life insurance policy taxable and do they have to be reported as income?
As per Section 10 (10D) of the Income-Tax Act, 1961, any sum received under a life insurance policy, including sum allocated by way of bonus on such policy is exempt from tax.
The above-mentioned exemption is not available if the premiums paid in any of the years during the term of the policy, exceeds 20% of the sum assured. However, any sum received under such a policy on the death of a person continues to be exempt in the hands of the beneficiary.
This is the first year that I received retirement benefits. Are any of my benefits taxable?
Amounts received by an annuitant, or his nominee, as pension are taxable on receipt basis.
What are the tax implications on surrender of a pension?
If an assessee or his nominee surrenders the pension plan before the maturity date, the surrender value shall be taxable in the year of receipt in the hands of the assessee or the nominee.
As per Section 80CCC (2), the entire amount received by the annuitant (including interest and bonus) in respect of the sum for which a deduction has been claimed under Section 80CCC (1) will be taxable.
In a joint life policy, can both the persons covered claim deduction for the same contribution?
Deduction under Section 80C is available only to the individual who pays the premium.
Are there laws to help me keep my health insurance if I lose or change jobs?
Most companies offer group medical insurance, where all employees and their immediate family are insured. If you resign from the company, this cover automatically ends as per the terms and condition of the policy.
Readers are welcome to write in with their queries to firstname.lastname@example.org. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Bert Paterson, managing director, Aviva India.