That death and taxes are the only certainties of life is a cliché. Each one of us would be willing to go the extra mile to reduce our tax liability. Insurance is the way to gain financial security and tax!
Health Insurance
Health insurance is a general insurance policy that can protect an individual, family, or group from specific health risks. Essentially, a health insurance policy will cover the cost of certain medical treatments and hospitalization expenses. Critical illness insurance policies (standalone and riders) also qualify as health insurance policies. Under Section 80 D of the income tax act, the premiums paid towards a health insurance policy (for one’s self and parents) can be claimed as a deduction from total income. The total deduction depends on the policyholders and their age.
Life Insurance
Life insurance is a financial risk management tool that addresses the financial risks that may arise from the death of the insured. Some life insurance policies act as investments (endowment, ULIPs, whole life policies), while others are used to replace the income of the insured (term insurance).
1. Life Insurance Premiums
The premiums paid for a life insurance policy can be claimed as a deduction from income under Section 80 C of the Income Tax Act. The maximum limit for deduction is Rs. 1.5 Lakhs.
2. Life Insurance Proceeds
The proceeds received from an insurance policy (either on maturity or upon the death of the insured) are normally exempt from taxation under Section 10(10) of the Income-tax act.