Generally, when you get a life insurance lies, its perceived benefits are coverage and an insured amount in case of an unfortunate event. While many of you may pursue them with the idea of securing your and your loved one’s future, they have more in store for you. Yes, a life insurance plan is of different types. Basis your goals and the details of the plan, it can offer worthwhile benefits.
Today, being a highly anticipated topic, let’s discuss how the benefits of life insurance plans can be doubled and converted to smart savings.
Know Why You’re Pursuing a Life Insurance Policy
Getting insured is not a difficult task if you’re aware of the goals you have set before investing in any plan. You simply choose a suitable plan and start investing. Now, these goals are mainly based on 4 factors, and they are:
- Investment Purpose
- Tenure
- Financial Position
- Insurance Plan
Exploring Types of Life Insurance Plans
While exploring a suitable life insurance plan for yourself, there are several things to consider, and choosing the right plan out of them is crucial. Here are some of them mentioned below:
- Term Insurance: This is simply a basic coverage plan that many invest in to ensure a death benefit for the family in case of an untimely demise.
- Whole Life Insurance: Though it’s another term insurance, it’s for whole life, which means up to 99 years of age or until you’re paying the premiums. Along with that, there’s also a cash value component.
- ULIP: A market-linked life insurance policy this is. In addition to insurance coverage, you will get investment benefits.
Apart from these basic insurance plans, you can modify them with the rider benefits. Now, let’s understand about their dual benefits.
Understanding the Smart Saving Element of Life Insurance Plans
Every insurance plan that you’re going to invest in will have unique features. However, there’s something other than coverage that’s common among them all. Do you know what it is? Well, it’s tax benefits. They are something that most of you may overlook being an insurance policyholder. Since the Income Tax Act 1961 has several sections related to this, here’s detailed information about them:
- Section 80C: The popular tax deduction through life insurance premiums is claimed in this section most of the time. You can deduct a part of your life insurance plan premium from the amount you pay as an income tax to reduce your taxable percentage. But, you cannot claim a deduction under Section 80C over the maximum allowable amount for each year, which is ₹1.5 lakhs.
- Section 10(10D): Section 10(10D) is one of the tax exemptions that can be availed of on maturity benefits received from a few kinds of life insurance plans.
- Section 80CCC: Under this section, you get deductions on the premiums paid for pension plans offered by insurance companies.
- Section 80D: You can claim tax deductions for premiums paid towards health insurance plans for you, your wife/husband and dependent children and parents.
Securing One of the Best Life Insurance Plans in India
Life insurance’s understandings are usually related to coverage benefits but it goes beyond that. They have tax benefits in different forms, and that’s what brings them to the same floor of smart savings. Being a life insurance policyholder, knowing them helps you double your savings and have better returns at year-end for yourself.