Planning for your financial security is crucial, and taxes are an integral part of that equation. As you begin looking for effective saving options in India, you may find several ones, but only a few offer such dual benefits. Here, an insurance plan can be your key to making savings.
Yes, you read it right! Term insurance plans are smart tax saving options for you or anyone to pursue. Let’s understand in detail how they can help you and why they are worth considering.
Things to conder when choosing the right Term Plan
Let’s understand a few essential factors to choose the right plan that aligns with your financial goals and requirements.
- Coverage amount: Determine the coverage amount based on your and your family’s requirements, liabilities, and future expenses. This will help ensure that the sum assured adequately covers and provides you and your family’s lifestyle and financial security in your absence. It also helps convert your plan into one of the best tax-saving options.
- Riders and add-ons: Evaluate the additional riders and add-ons offered by the insurance company. Choose the ones that provide comprehensive coverage tailored to your needs. Also, assess the cost-effectiveness of the riders and their benefits before making a decision. This will help you tailor your plans into better tax-saving investment options.
- Claim Settlement Ratio (CSR): Check for the claim settlement ratio (CSR) of the insurance company. It’ll help ensure hassle-free claims in case of unforeseen events.
Benefits of choosing the best tax saving options
Traditional tax saving opportunities, like term insurance, are also focused on wealth creation. But beyond its core purpose, here’s how term insurance offers significant tax benefits:
- Deduction under Section 80C: Tax deductions under the Income Tax Act 1961’s 80C Section are up to ₹1.5 lakh per annum. Since they lower your tax liability, remember that they apply to premiums paid for yourself, your spouse, and your dependent children only. With rider benefits, an additional deduction of up to ₹25,000 u/s 80C is available.
- Additional deduction under Section 80D (if applicable): Adding rider benefits to your existing plan makes premiums paid eligible for an additional deduction of up to ₹25,000 under Section 80D. This further opens doors to tax saving investment options.
- Tax-free death benefit: The death benefit received by a nominee in case of an unfortunate demise is also completely tax-free.
- Flexible-premium payment options: Term insurance plans offer flexible premium payment options. You can choose between different payment modes based on your convenience.
- No maturity amount: Unlike traditional investments, term insurance doesn’t offer a maturity amount. Regardless of the plan’s performance, you will receive a guaranteed tax deduction on premiums paid.
- Affordability: Term insurance premiums are generally more affordable than other wealth-creating and tax saving options like ELSS.
- Increasing cover options: Many term plans offer the option to increase coverage over time, offering flexibility and allowing you to adjust your coverage as required. This helps ensure adequate protection for your loved ones at every stage.
- Online Convenience: Purchasing and managing your term insurance plan as one of the best tax saving options is now easier than ever with online platforms. They help compare plans, calculate premiums, and even purchase a policy seamlessly, saving you time and effort.
Invest in Term Insurance today
Exploring safe and secure tax saving options has now become easier than ever. By strategically including term insurance in your financial planning, you can secure your loved one’s future and also make savvy use of tax benefits. The only catch that remains is buying it from the right insurance company.
Canara HSBC Life Insurance is one such offering that is highly reliable and has excellent customer support. One can buy from their official website easily. It has user-friendly interface to navigate through different options seamlessly.
