BackInsurance plan that can help save tax in the new financial year
The new financial year has begun, and people are looking at options which can help increase their wealth, give financial protection to the family and can also help save taxes.
PremiumThe new financial year has begun, and people are looking at options which can help increase their wealth, give financial protection to the family and can also help save taxes. While investment tools like mutual funds/ PPFs/ FDs/ NPS etc. can help create wealth and save tax, multiple insurance products in life and health insurance categories can help individuals in safeguarding their finances, along with tax saving.
In health insurance, individuals can save tax under Section 80D, where the policyholder can get a deduction of upto INR 25,000 for his/ her health insurance, as well as for the spouse and children. The policyholder can also get a deduction upto INR 50,000, if the parents are above 60 and deduction of INR 25,000, if parents are below the age of 60. Policyholders (Under Hindu Unified Family) who are paying for any disabled family member, can get exemptions upto INR 1.25 lakh under Section 80D. People can also get tax exemption of upto INR 5000, for preventive health check-up, under section 80D; this tax exemption can be claimed on behalf of the policyholder or his/ her spouse, children and even parents.
In case of life insurance plans, an individual can claim a tax deduction of up to INR 1.5 lakh on premiums paid towards life insurance policies under Section 80C. This deduction is available for policies that cover the individual, his/ her spouse and children. However, it is important to note that the life insurance policy must have a minimum term of 5 years to be eligible for tax deduction. Government has also revised the tax rules under ULIPs, where the proceeds from ULIPs will lose their tax-exempt status if the total premiums for all ULIP policies held by an individual surpass INR 2.5 lakh annually, under Section 80C.
While life and health insurance policies can help individuals with tax saving, people should not look at buying these policies only for tax saving purpose. Both life and health insurance are significantly important for protecting an individual and his/ her family from any kind of unprecedented circumstance.
Author: Indraneel Chatterjee, COO, RenewBuy
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