Call us
Call us
FOR NEW POLICY
Want to buy a new policy online?
Thank you for sharing your details. To receive a call from Tata AIA Financial Advisor.
reCAPTCHA is not working.
No relevant search results found.
Understanding the term insurance tax6 benefits can help you plan your finances effectively. Under Section 80C of the Income Tax Act, Read more premiums paid towards a term insurance plan may be eligible for deductions. A term plan is a reliable choice for both financial protection and long-term planning. It also helps you save while securing your family’s future.. Read less
Understanding the term insurance tax6 benefits can help you plan your finances Read more effectively. Under Section 80C of the Income Tax Act, premiums paid towards a term insurance plan may be eligible for deductions. A term plan is a reliable choice for both financial protection and long-term planning. It also helps you save while securing your family’s future. Read less
Your premium calculation is in progress
Kindly enter the OTP sent to
Please enter valid OTP
01:60
Didn't receive OTP?
Get Life Cover of ₹1 Crore by paying a premium of
₹7,085/month (for 30 years)
₹8,287/month
Save ₹1,202 with discounts
Includes 10% digital + 8.5% salaried discount on 1st year premium
Excludes GST
Our sales representative will connect with you soon to assist further
Tata AIA Life Insurance Sampoorna Raksha Promise (A Non-Linked Non-Participating, Pure Risk, Individual Life Insurance Plan) • UIN: 110N160V7
Your details have been successfully submitted. A representative from Tata AIA Life Insurance will call you soon.
Your details could not be saved.
Please try again.
Term Insurance Tax Benefit Sections: A Quick View
IT Act Sections |
Tax6 Benefits |
Eligibility |
Section 80C |
Deductions up to ₹1.5 lakhs for annual premiums paid towards the term insurance policy. |
Individuals and Hindu Undivided Family (HUF) |
Section 10(10D) |
Full death benefit amount is tax-exempt. Maturity benefit amounts are exempt, subject to certain terms and conditions. |
1. Salaried or non-salaried Individuals 2. Hindu Undivided Family (HUF) Associations 3. Body of Persons 4. Foreign Companies 5. Trusts |
Section 80D (Applicable for Tata AIA health riders and term plans with medical insurance coverage) |
Deduction of up to ₹25,000 or ₹50,000 (for senior citizens) for the annual premium amount(s) paid towards medical insurance or health riders purchased with a term insurance policy. |
Individuals and Hindu Undivided Family (HUF) |
Tata AIA
Non-Linked, Non-Participating, pure risk, Individual Life Insurance Product (UIN:110N176V07)
Term insurance is a type of life insurance policy that provides risk coverage. It provides a lump sum to the nominee in case of the policyholder’s demise during the policy term. This payout is completely tax-free under Section 10(10D) of the Income Tax Act.
Premiums paid towards term insurance are eligible for tax6 deductions under Section 80C, up to ₹1.5 lakh per financial year, thereby reducing the taxable income. Additionally, the term insurance tax benefit 80D may be claimed if the policy includes critical illness or health-related riders7.
The key provisions applicable for tax benefits on term insurance include Section 80C, Section 80D, and Section 10(10D) of the Income Tax Act. Together, these sections may offer financial protection along with potential tax savings, depending on the policy features.
Under Section 80C, premiums paid for your term insurance policy are eligible for tax deductions. The deductions are allowed on a payment basis, i.e., all premiums paid within a financial year can only be claimed as a deduction in that financial year.
Individuals and Hindu Undivided Families (HUFs) are eligible for this tax deduction. For individuals, the term insurance policy can be taken in the name of the taxpayer or their spouse and dependent children.
You can claim up to a maximum amount of ₹1.5 Lakh as per the income tax laws. For example, you can have a term plan that includes you, your spouse and dependent children. All the premiums under the policy will be eligible for tax deductions.
Here are some conditions to keep in mind before filing tax deductions for term insurance under 80C:
For term policies issued on or before March 31, 2012, the deduction will be restricted to 20% of the sum assured. E.g., if the sum assured is 30,000 and the premium is ₹8,000, Up to ₹6,000 can be claimed as a deduction.For term policies issued on or after April 1, 2012, the deduction will be restricted to 10% of the sum assured. E.g., If the sum assured is ₹2 lakhs, and the premium is ₹30,000, you can claim ₹20,000 as a deduction.For a single premium payment, the sum assured should be 10 times the sum assured to claim the full deduction amount – ₹1.5 lakhs. If not, only 10% of the sum assured can be claimed as a deduction.The term policy must be held for a minimum of 2 years as per Section 80C(5). If the policy is surrendered within 2 years, then any deductions filed will be deemed as income from the previous year of termination, sale, etc. No deductions will be allowed under the policy on the year of termination/surrender.Only the death benefit amounts paid under term insurance policies are fully tax exempt under Section 10 (10D) of the Income Tax Act, 1961. Hence, in the event of the policyholder’s death, their family can receive the full death benefit amount.
For maturity benefits, term insurance plans purchased on or after April 1, 2023, will have their maturity payout amounts taxed if the annual premium exceeds ₹5 lakhs. The amount will be taxed as per the policyholder’s tax slab rate. Most taxpayers can claim the amount if they are mentioned as a policy nominee or beneficiary under the term plan.
Here are some scenarios where the term insurance tax exemption cannot be applied, and your beneficiary may need to pay tax on the payout amounts:
If the amount is paid out under Section 80DD (3) of the Income Tax Act for the medical treatment and maintenance of a disabled nominee.If the benefit is paid out under a Keyman Insurance Policy.If the total premiums paid towards the policy exceed 20% of the sum assured.For term plans issued on or after April 1, 2012, the exemption benefit would apply only if the total premium paid is below 10% of the sum assured.Additional premiums paid for term plan health riders that offer medical insurance coverage can be claimed as a deduction under Section 80D. For example, a critical illness health rider7 under your term plan can make you eligible for this deduction.
Individuals and HUF taxpayers are eligible to claim a maximum deduction of up to ₹25,000 or ₹50,000 (for senior citizens over 60) on annual premium payment. Under this deduction, annual preventative health check-ups up to ₹5,000 can also be included within the total deduction amount of ₹25,000/₹50,000.
You should note that medical insurance premiums should be paid by any mode other than cash to be eligible for deductions. However, payments for preventive health check-ups can be made in cash.
You can enhance the coverage of your term insurance with the help of riders7. They will require an additional premium and will increase your overall term insurance premiums. However, the premiums paid towards add-on riders can be included under your term insurance 80C deductions. As stated, you can claim a maximum deduction amount of ₹1.5 lakhs per year, subject to the terms stated above.
Moreover, medical coverage under term plans generally comes in the form of health riders and add-on covers. These can make you eligible for additional deductions under Section 80D. This deduction is also applicable over and above the limit under Section 80C.
Here is how you can choose the right term insurance plan for optimum tax6 benefits.
Check Eligible Tax Sections: Premiums qualify for deductions under Section 80C, while health-related riders may offer additional benefits under 80D.Ensure Tax-Free Payouts: The life cover amount received by your family is generally tax-exempt under Section 10(10D).Compare Plans for Better Savings: Choose a plan with a suitable premium, coverage, and riders to maximize your term plan tax benefit based on your income and goals.The steps to claim term insurance tax6 benefits are as follows.
Individual Death Claim Settlement Ratio in FY24-25
Express Claim Settlement8
Presence across major cities in India
families protected so far9
8T&C apply
The following are the eligibility criteria to claim term insurance tax benefits:
When purchasing a term insurance policy, it is important to consider the applicable Goods and Services Tax (GST), which varies depending on the type of plan selected:
These GST rates are applied in addition to the base premium and have a direct impact on the total premium payable. Therefore, understanding the applicable tax structure is essential for effective financial planning and accurate policy evaluation.
To calculate your term insurance tax savings, follow these steps:
Premiums paid for term insurance are eligible for deduction under Section 80C up to ₹1.5 lakh per year.
Example:
If your annual income is ₹10 lakh and you pay ₹1.5 lakh as a term insurance premium, your taxable income becomes ₹8.5 lakh. This directly reduces your tax liability.
If your policy includes health-related riders, you can claim an additional deduction under Section 80D up to ₹25,000 (₹50,000 for senior citizens).
Example:
Let's say you have term insurance offering coverage of ₹ 5 lakh. Now, you want additional protection for possible health issues. You can add a health rider of ₹Rs. 20,000. Paying ₹20,000 for a critical illness rider allows you to claim that amount under Section 80D, in addition to your Section 80C limit.
The death benefit paid to your nominee is fully tax-exempt under Section 10(10D), ensuring your family receives the entire payout without tax deductions.
Example:
If you have a term insurance policy with a sum assured of ₹50 lakh, your nominee will receive the entire ₹50 lakh amount without any tax deduction under Section 10(10D) when a claim is made.
The term insurance offers significant tax benefits under Sections 80C, 80D, and 10(10D) of the Income Tax Act, 1961. Investing in a suitable term plan enables policyholders to secure their family's future while saving on taxes. It is important to understand the eligibility criteria, deduction limits, and conditions for tax-free payouts to enhance the available tax benefits. Choosing the right policy and maintaining compliance helps ensure both financial protection and effective tax planning.
Our experts are happy to help you
Our experts are happy to help you!
1.Will income tax deductions affect my term insurance sum assured?
No, tax deductions do not impact the sum assured. It remains fixed unless you have an increasing or decreasing term plan.
2.Are the term insurance tax benefit sections available under the new tax regime?
No, only Section 10(10D) exemptions on payouts received by nominees are available under both regimes. Sections 80C and 80D deductions apply only under the old tax regime.
3.How do I calculate my term insurance tax deductions?
Use an online income tax calculator provided by Tata AIA. Subtract eligible deductions from your gross income to find your taxable income.
4.Can I still get income tax benefits if I am not paying my term insurance premiums?
No, you cannot claim tax benefits on a lapsed policy. If you stop paying premiums, your policy becomes inactive and ineligible for deductions. To regain benefits, you must revive the policy.
5.Who is eligible to claim tax benefits on term insurance premiums?
Individuals, Hindu Undivided Families (HUFs), and NRIs (for Indian policies) can claim deductions under Section 80C for premiums paid on term insurance policies held in their own name, or those of their spouse or dependent children.
6.Do term insurance policies offer tax benefits under Indian tax laws?
Yes. Premiums are deductible under Section 80C (up to ₹1.5 lakh), health rider premiums under Section 80D (up to ₹ 25,000–₹ 50,000), and death benefit payouts are exempt under Section 10(10D).
7. How much premium paid for term insurance is tax-exempt?
Premiums up to ₹1.5 lakh per financial year are deductible under Section 80C. If health-related riders are included, additional deductions under Section 80D up to ₹ 25,000 (₹ 50,000 for senior citizens).
8. Is the payout from a term insurance policy taxable in India?
No. The payout received by the nominee after the policyholder’s death is completely tax-free under Section 10(10D), as long as the annual premium does not exceed 10% of the sum assured.
9.Are death benefits from term insurance completely tax-free?
Yes. The entire death benefit is exempt under Section 10(10D), with no upper limit if premiums don’t exceed prescribed limits relative to the sum assured.
10.What are the conditions to claim tax exemption under Section 10(10D)?
Exemption applies if the policy was issued after April 1, 2012, and premiums do not exceed 10% of the sum assured (20% for earlier policies). Policies must be active and meet other regulatory criteria.
11.Who can claim tax deductions under Section 80D of the Income Tax Act?
Resident individuals, NRIs, and HUFs can claim deductions under Section 80D for health insurance and related rider premiums covering self, spouse, children, and parents.
12.What types of payments are allowed as deductions under Section 80D?
Allowed deductions include health insurance premiums, premiums for critical illness and accident riders, and preventive health check-up costs, subject to annual limits.
13.What exclusions apply under Section 80D for tax deductions?
Deductions are not allowed for cash-paid medical insurance premiums (except for check-ups), payments beyond the specified limit, and non-insured individuals.
14.Are critical illness or accidental death rider premiums tax-deductible?
Yes. Premiums paid for critical illness and accidental death riders included in term insurance policies qualify for deductions under Section 80D.
15.Which rider benefits under term insurance qualify for tax benefits?
Riders7 offering health-related coverage such as critical illness, accidental death, and waiver of premium are eligible under Section 80D. Death payouts under riders are exempt under Section 10(10D).
16.Can NRIs avail tax benefits on term insurance purchased in India?
Yes. NRIs holding Indian term insurance policies can claim deductions under Section 80C (premiums) and continue to benefit from Section 10(10D) exemptions.
17.Are there any scenarios where the term insurance beneficiary pays tax?
Yes. Tax may apply if total annual premiums exceed ₹5 lakh (policies issued after April 1, 2023), or if the premium-to-sum assured limits are violated. Keyman policy payouts may also be taxable.
18. Is it advisable to buy term insurance mainly for tax savings?
Tax benefits are valuable, but term insurance should primarily be chosen based on coverage needs. Buying solely for tax savings may lead to inadequate protection.
Popular Searches
Disclaimers
FOR EXISTING POLICY 
Step 1: Understand Applicable Tax Sections
Step 2: Collect Premium Payment Proofs
Step 3: File ITR with Correct Details
Step 4: Verify Tax-Free Payout Eligibility
