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LIC Tax Saving Plans

3 Best tax saving insurane plans in India

Tax-saving or tax-planning is an important part of financial planning. If wisely done, it can serve a dual objective – help individuals meet their financial goals and save tax in the process.

Broadly, these are the three insurance avenues that can help maximize tax-savings:

  1. Life Insurance

Life insurance is a critical part of any individual’s financial portfolio. It offers financial cover to the individual’s family in his absence. For this reason the breadwinner must aim to take life insurance at the earliest for the family’s security.

Life insurance products came in various forms with endowment plans, term plans, whole life plans, money back plans and unit-linked plans or ULIPs being the most important.

From a tax saving perspective all insurance plans are ‘equal’ before the law. So regardless of the life insurance plan, tax-saving is assured. The premiums paid on these policies help avail tax deduction and hence they are some of the important tax saving plans that one must be sure to consider.

Details

Maximum deduction that can be claimed is Rs 1.5 lakhs

Tax benefit under Section 80C*

Tax-free proceeds on maturity/death under Section 10(D)*

  1. Pension plans

Pension plans or annuity plans are another form of life insurance with a different end-objective. While life insurance is geared to protect the individual’s family on his death, pension is designed to provide for the individual and his family if he lives on.

Two phases punctuate the pension process – LIC Tax Saving Plans accumulation and withdrawal. In the accumulation phase the individual sets aside money in his earning years. Retirement kicks in the withdrawal phase.

Tax benefits are applicable only in the accumulation phase.

Details

Maximum deduction that can be claimed is Rs 1 lakh

Tax benefit under Section 80CCC (sub-section under Section 80C)

On maturity 1/3rd of the accumulated amount is tax free with the balance 2/3rd treated as income and taxed at the marginal tax rate. The amount is tax free upon death of beneficiary.

  1. Health insurance or Mediclaim

Health insurance or Mediclaim as it is more popularly known, covers expenses incurred from an accident/hospitalization. Mediclaim also covers pre- and post-hospitalization expenses, subject to the sum assured.

Health insurance offers tax benefits to individuals. Insurance premium up to Rs 20,000 for senior citizens and Rs 15,000 for others is eligible for tax benefit, thus proving to be an efficient tax saving investment. If an individual pays Rs 15,000 as premium on his own policy and Rs 20,000 for his parent, who is a senior citizen, he can claim tax benefit of Rs 35,000 (Rs 15,000+20,000)

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LIC Zaroor hai

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โˆ™ 2022-01-08 08:25:18
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Wiki User

โˆ™ 2014-06-09 20:07:36

Death benefits are usually not subject to federal income tax. There are exceptions, though, such as, if the IRS deems your insurance policy to be an investment in disguise. Your insurance agent or accountant should be able to give you guidance.

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Brian So

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โˆ™ 2020-11-23 16:42:50

In Canada, the death benefit from a life insurance policy is typically not taxable. However, if you do not name a beneficiary in the policy, the proceeds will go to the estate of the owner. That amount may be subject to probate fees which can be quite substantial depending on the province you reside in.

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Q: Are life insurance benefits taxable.
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Related questions

Are life insurance benefits taxable?

It is not taxable under setion 10(D)


In NC are life insurance death benefits taxable?

no


Are life insurance benefits subject to federal income tax?

No. Life Insurance proceeds to beneficiaries are not taxable.


Are life insurance benefits taxable in Nebraska?

No As a general rule of thumb, any benefit from a personal life insurance policy is not taxable. However, any interest or investment gains earned on the future growth will be taxable.


Are life insurance benefits taxable in Massachusetts?

That is the beauty of life insurance! With a properly named beneficiary life proceeds are not taxed and they avoid probate.


Is money inherited from a parent's life insurance policy taxable income?

Death benefits are not taxable for income tax purposes.


Will soon be a beneficiary of a funeral insurance policy that was not discovered until after funeral had been paid in full Is amount taxable?

Life insurance benefits are typically not taxable.


Are benefits from a whole life insurance policy taxable?

As a general rule, life insurance proceeds from any type of policy are not taxable to the beneficiary. In addition, any loans from cash value are not taxable unless the policy lapses.


What are five types of income that are not taxable?

child support, gifts, inheritances, life insurance benefits, and veterans benefits


Are health insurance benefits taxable?

At this time, October 2010, health insurance benefits are NOT taxable. However, as the new national healthcare progresses over the years there are provisions in it that my treat those benefits as taxable income.


If my employer pays the premium for an insurance policy for me is it taxable?

Yes, the benefits are taxable.


Is money gained from a life insurance inheritance taxable income?

No. Death benefits from life insurance are not taxable. The only way that it could be taxes is if you illegally deducted your premiums on your tax returns. As long as the premiums are paid with after- tax money, there is no income tax on death benefits.

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