tax saving plans

As per Income Tax Act, 1961 one can save Income-Tax by making investments in different insurance products vide section 80 [C]; 80 [CCD] & 80 [D] of the Act.

Section 80 [C] of the Act States that Investments made in National Savings Schemes viz. National Saving Certificates; PPF/EPF; Life Insurance Policy premiums; Tax Saving F.D. of Bank; Equity Linked Saving Schemes of Mutual Fund etc; all combined up to Rs.1.50 Lac in a year by an individual or HUF qualify for Tax Rebate.

However, there is one extra benefit for investments in Life Insurance Policies, one can go in for a policy on his own life, or on the life of his wife, or on the life of his child whether minor or major; whether single or married; whether tax payer or non-tax payer for claiming rebate in Tax.

Likewise, a lady can take a policy on her own life or on the life of his husband or any child of any category as stated above and can claim the tax rebate for the premium paid during the year.

Besides, life insurance policies are regular savings schemes and one can plan for all future needs by taking policies for the period matching with their needs; and even the retirement need.  Investments made in Life Insurance policies is the best because of several options and many good features:-

  • One can claim tax rebate year after year for the premiums paid which are generally a long term contract.
  • No tax is levied on maturity value because bonus earned year after year is tax-free.
  • No Tax of any kind is levied on the death claim amount payable to the nominee of the policy.
  • Life Insurance Policies can be logged against the loan.
  • Life Insurance Policies can be assigned to near and dear one because of natural love and affection & in that case the money on maturity will be paid to assigned person and it becomes his/her capital. Assignment supersedes the nomination and as such in the case of prior death the death claim amount will be paid to the assignee and no tax will be levied.
  • Tax rebate can be claimed either by husband/father or wife/mother whosoever pays the premium amount during the year. There is no restriction of any kind.  Anybody can claim in any of the years whosoever deposits the premium of own life policies or on the life of other people i.e. husband/wife or any of the children.
  • There are several types of policies which have been designed looking to the different types of needs of persons. Most popular are Pure-Risk Term Insurance Plans; whole life plans; Fixed Period Savings-cum-insurance plans (Endowment Plans) Market Linked Unit Linked Plans; Children Endowment Plans all qualify for tax rebate up to a total amount of premiums up to 1.5 Lac per annum. Besides above on can invest in Pension Plans of  Life Insurance Company or National Pension System upto Rs.50,000/- per year maximum for claiming tax rebate vide section 80 [CCD] of Income Tax Act, 1961.
  • Besides tax rebate vide section 80[C] for premium paid upto Rs.1.50 Lac and Rs.50,000/- per year for Pension Scheme vide Section 80 [CCD]. One can take tax rebate upto Rs.25,000/- premium per year for the health insurance cover or critical illness cover taken in Life Insurance/General Insurance policies vide section 80 [D] of the Income Tax Act, 1961.


That besides, tax rebate claimed for Life Insurance Policies premium through section 80 [C] & 80 [CCD] one can claim tax rebate vide section 80[D] of Income Tax Act upto Rs.25,000/- premium paid for Mediclaim Insurance of any General Insurance Company on his own life or on the lives of dependent family members.  For Sr.Citizen this benefits is upto a premium of Rs.30,000/- per year for mediclaim policy on his own life and on the life of his wife; if both are Senior Citizens.

Life Insurance Policy premiums deposited vide Section 80 [C] upto Rs.1.50 Lac Maximum; Plus Rs.50,000/- under section 80 [CCD]  (in pension scheme) plus Rs.25,000/-for Health Insurance/Mediclaim  Insurance. Thus the total amount of Rs.2,25,000/-maximum is deducted from the total income and tax is to be levied on the Net Taxable Income of an individual or HUF.

Raghunandan Insurance Brokers (P) Ltd. | Direct broker code: IRDA: DB/352

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