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Business News/ Money / Personal Finance/  Top 5 insurance products to avail tax benefits and security before FY23

Top 5 insurance products to avail tax benefits and security before FY23

January is the best time to review and optimise your insurance policies for the coming year. Here are five insurance plans that can provide an optimum cover, help you save on taxes, and ensure rational spends.

Insurance companies saw a significant increase in claims during the pandemicPremium
Insurance companies saw a significant increase in claims during the pandemic

It is not unusual to find many amongst us checking out for insurance policies in the month of January with an intent to get some tax benefit. A hurried search may not lead to the right cover selection and often the spend on insurance is without proper deliberation which may lead to our insurance cover remaining inadequate.

Here are some policies which we may seek to help ourselves not only to provide an optimum cover but also do a rational spend and of course save on taxes! Here are five Insurance plans which can help you optimise your insurance requirements but save taxes as well.

Health insurance: Needless to mention that health insurance is a must have in the current times, considering the growing medical inflation. For First-time cost-conscious health insurance buyers, ‘Arogya Sanjeevani’ policy can be useful. This offers a wide sum insured option from up to 10 lacs and has an option to cover children as well as parents.

Health Insurance policies are also available with wider covers in terms of range of sum insured, additional riders like restoration benefits, addition of cumulative bonus even in the event of a claim etc.

Health insurance top up policy: A top up policy can help to provide a much higher sum insured at a relatively low cost. This is because in case of top up policies, there is a deductible which can be chosen as per the options provided. The top up policies come into play if the claim amount is higher than the sum insured of the existing policy.

Example: The claim amount is 10 lacs and the deductible opted for 5 lacs, 5 lacs can be claimed from the Top up Policy, subject to the sum insured of the top up policy is more than 10 lacs.

Illustration: In case the sum insured of the base policy is 3 lacs, the deductible for the top up policy can be chosen likewise. Super top up policies with riders like restoration benefits are available in the market

Health policy for senior citizen: Premium paid for Insurance towards the health policies for parents is exempted from tax. There are several health policies available in the market designed for senior citizens.

Term insurance with return on premium: Term insurance is the simplest form of life insurance. It is also one of the most affordable life insurance products. Term insurance does not have an investment component and simply guarantees a pre-decided pay out on the death of the insured. The life insurance cover offered, is a simple plan that offers financial coverage for a certain period.

Although a basic term insurance plan can be highly beneficial for most individuals, a term insurance with a return of premium plan can offer benefits beyond that. A term plan with a return of premium is the same as the normal term plan.

However, the one feature that differentiates it from regular term insurance plans is the survival benefit. Policyholders can avail survival benefits and get back the premiums (excluding GST) paid to the insurers. It can also be complemented by other add-on benefits associated with this plan including disability benefit, accidental death benefit, and protection against critical illness.

Life insurance plans with guaranteed returns: It come with tax saving benefits as well as assured returns. These policies would benefit an individual in three ways: By providing life insurance cover, by facilitating savings with guaranteed and good returns and tax benefit. Further, the income earned as maturity benefits is also exempted from Income tax.

However, it is advised that before purchasing any insurance policy, one should evaluate the available options and go through the policy features in detail.

Supriya Rathi, Wholetime Director, Anand Rathi Insurance Brokers Pvt. Ltd.

Here we describe the common exclusions for health, life, motor and general insurance policies.
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Here we describe the common exclusions for health, life, motor and general insurance policies.

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Published: 24 Jan 2023, 02:16 PM IST
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