Best Life Insurance Options for Smart Financial Planning.
Best Life Insurance Options for Smart Financial Planning.
Types of Life Insurance
Term Life Insurance
Offers protection for a set period such as 10, 20 or 30 years, providing financial support to your family if something happens to you during the term.
Whole Life Insurance
Provides lifelong coverage along with a cash value component that grows over time offering both protection and savings.
Unit-Linked Insurance Plans (ULIPs)
Combines life insurance with investment opportunities helping you secure your family’s future while growing your wealth.
Benefits of Life Insurance
Benefits of
Life Insurance
Financial Security
Provides a lump-sum payment to your beneficiaries offering stability and support during difficult times.
Income Replacement
Helps replace your income, ensuring your loved ones can maintain their lifestyle and meet daily expenses.
Debt Repayment
Assists in clearing outstanding debts like home loans, personal loans or credit card dues, easing financial stress for your family.
Wealth Creation
Certain life insurance plans help you grow your savings over time, supporting future goals like education, marriage or retirement.
Tax Benefits
Premiums paid towards life insurance policies are eligible for tax deductions, helping you save money while securing your future.
Financial Security
Provides a lump-sum payment to your beneficiaries offering stability and support during difficult times.
Income Replacement
Helps replace your income, ensuring your loved ones can maintain their lifestyle and meet daily expenses.
Debt Repayment
Assists in clearing outstanding debts like home loans, personal loans or credit card dues, easing financial stress for your family.
Wealth Creation
Certain life insurance plans help you grow your savings over time, supporting future goals like education, marriage or retirement.
Tax Benefits
Premiums paid towards life insurance policies are eligible for tax deductions, helping you save money while securing your future.
Key Considerations for Life Insurance
Coverage Amount
Assess how much coverage you need by considering your income, family expenses, debts and future financial goals.
Riders and Add-ons
Look into additional benefits like accidental death cover or critical illness protection to enhance your policy.
Premium Payments
Select a premium amount and payment schedule that comfortably fits within your budget.
Policy Term
Choose a coverage duration that aligns with your family’s long-term needs, such as children's education or home loan repayment.
Tax Guide for Investors
Section 80C - Life Insurance Premium Deduction
- Maximum Deduction: ₹1.5 lakh per financial year.
- Eligible Policies: Life insurance premiums paid for self, spouse and children.
- Tax Regime Applicability: Available only under the old tax regime, not applicable under the new tax regime.
Section 10(10D): Tax-Free Maturity
- Policies Issued Before 1st April 2003: Tax-free regardless of premium amount.
- Issued Before 1st April 2012: Premiums should not exceed 20% of the sum assured. (Except in case of death)
- Issued on or After 1st April 2012: Premiums should not exceed 10% of the sum assured. For disable person or person suffering from disease, limit should not exceed 15%. (Except in case of death)
- Death Benefits: Fully tax-free, irrespective of the premium amount.
Unit-Linked Insurance Plans (ULIPs) (Issued on or after 01-02-2021)
- If you have paid a premium over Rs. 2.5 lakh for any of the years during the tenure of the ULIP, then the amount received (including the bonus) at the time of maturity will be taxable.
- If you have purchased multiple ULIP plans and the aggregate premium paid exceeds Rs 2.5 lakh, then it is subject to taxation (only ULIPs with aggregate premium up to Rs. 2.5 lakh are exempted).
- If the ULIP is held for more than 12 months, its redemption will be classified as a long-term capital asset, attracting a 12.5% tax.
Life Insurance Policy other than ULIPs (Issued on or after 01-04-2023)
- If you have paid a premium over Rs. 5 lakh for any of the years during the term, then the amount received (including the bonus) at the time of maturity will be taxable.
- If you have purchased multiple Policy plans and the aggregate premium paid exceeds Rs. 5 lakh, then it is subject to taxation (only Policies with aggregate premium up to Rs. 5 lakhs are exempted).
- Such income is taxable under Income from other sources.
Tax Planning Tips for Investors
- Policy Selection: Opt for life insurance policies where premiums are within the permissible limits to ensure tax-free maturity benefits.
- ULIP Investments: Be cautious with ULIPs, ensure the annual premium does not exceed permissible to avail tax exemptions.
- Tax Regime Consideration: If you're under the new tax regime, Section 80C deductions are not available; plan your investments accordingly.
- Policy Monitoring: Regularly review your policies to ensure compliance with tax laws and to optimize benefits.
Life Insurance Offerings
