Life insurance plans have become a basic need to secure your family in case of your unexpected demise. The Government of India also considers the importance of such financial products and encourages people to invest in them by providing tax benefits under the Income Tax^* Act, 1961. And Section 80C is one of the most and best-used tax provisions that help policyholders secure their family's financial future while saving on tax*. So, let us get started and understand how you can benefit from purchasing Tata AIA term insurance plan and save on tax under Section 80C.

Before we understand how to save on tax, let us glance through the benefits of Income Tax^* 80C of the Income Tax Act.

What is Section 80C of the Income Tax Act, 1961?

Section 80C of the Income Tax Act, 1961 provides a tax^* deduction on your total gross income up to ₹ 1,50,000 to reduce your net taxable income for investments made on various financial products.

It includes financial expenditure incurred and investments made in

1. Fixed Income Products such as Provident Fund, Public Provident Fund, National Savings Certificate, Tax Saving Fixed Deposits, etc.,

2. Variable Return Products such as Life Insurance Premium, Equity Linked Savings Certificate, Pension Plans from life insurance companies, Unit Linked Insurance Plans(ULIP), etc.,

3. Other expenses such as amount spent on home loan principal repayment, tuition fees for children, etc.
   
   

How to Secure Tax Benefits Under Section 80C with Tata AIA Term Plans?

Tata AIA term plan provides a range of benefits while saving on tax. The premium amount you pay towards purchasing Tata AIA term plans will qualify for tax benefits under Section 80C of the Income Tax Act, 1961.

1. If the term policy is surrendered or terminated within two years from the beginning of the policy term, you will not be able to claim the deductions under Section 80C.
   
   

It is important to note that, under these conditions, the death benefit from the term plan also qualifies for tax exemption under Section 10(10D) of the Income Tax Act.

The tax deduction is applicable on the premium paid when you buy the term plan for self, spouse or children. The children can be minor or major for consideration. Also, this tax deduction under 80C applies to individuals and HUF.

Example

Let us consider an example to understand the tax benefits on term plans. Suppose Ms Kamala invests in Sampoorna Raksha Supreme term plan and pays a yearly premium of ₹30,000 for a sum assured of ₹28,00,000 and policy term 10 years. Her yearly premium does not exceed 10% of the sum assured. Therefore, the premium qualifies for tax deduction under Section 80C.

Here is the income tax calculation for Ms Kamala, considering her salary structure and investments in Life Insurance Term Plan and National Pension Scheme.

 

Particulars	Amount(₹)
Basic Salary(₹30,000*12)	₹360000
Dearness Allowance (20%)	₹72000
Total	₹432000
HRA	₹1000
Contribution by the employer to NPS	₹50000
Contribution by employee to NPS	₹50000
Gross Total Income	₹533000
Less Standard Deduction	₹50000
Gross Taxable Income	₹483000
Deduction under Section 80C
Contribution of Employer to NPS	₹43200
Contribution of Employee to NPS	₹43200
Premium paid for Sampoorna Raksha Supreme	₹30000
Total	₹116400
Net Taxable Income	₹366600

 

Tax Slab	Rate(%)	Tax(₹)
Upto 250000	Nil	Nil
250000 - 500000	5%	₹5830
Total		₹5830
Cess	4%	₹233
Total Income Tax Liability		₹6063

We can see a considerable decrease in the net taxable income and further the tax liability due to her investments. Therefore, it is important to make a financial plan with sufficient investments to secure life and tax savings. Here is a brief of term plans.

Tata AIA Term Life Insurance Plans

Tata AIA offers different term life insurance plans to provide customised financial solutions to policy seekers.

1. Tata AIA Life Insurance Saral Jeevan Beema (UIN: 110N157V01)is the simplest and affordable pure protection plan. There is flexibility to choose the premium payment mode and frequency. You can also enhance the benefit by opting for additional riders^# such as the critical illness rider^#, terminal illness rider^#, etc.

2. Tata AIA Life Insurance Sampoorna Raksha Supreme (UIN: 110N160V02) provides death benefits with regular income, options to top up at different milestones in your life, optional comprehensive protection and health riders^# etc.

3. Tata AIA Life Insurance InstaProtect Solution combines the benefit of life coverage with accidental death, total and permanent disability, critical illness, hospitalisation expenses etc. You can also choose to receive the return of the premium amount paid if you survive the policy term by paying an additional premium but saving more on tax simultaneously.
   
   

Conclusion

While investing with Tata AIA term plans, you can choose from a range of the most affordable and comprehensive solutions while saving on tax*. Therefore, the premium amount you spend on purchasing the term plan will qualify for a tax^* deduction based on the discussed terms and conditions. Moreover, you can customise the products based on your steady flow income and family commitments to maximise protection for your family in case of your unexpected demise. So start investing early, stay invested in the long term, and save more on tax!

 

L&C/Advt/2022/Apr/0859