Life Insurance is a must for any income generating individual. The nature and the quantum of risk cover required varies from person to person. The Government also provides you with excellent tax benefits for the amount of life insurance premium you pay under sec 80 C of the Income Tax Act.
The insurance premium paid on our life insurance policies is deducted from your total income under Sec 80 C. The practical story is that most of you would have already exhausted the available limit of Rs100,000 under Sec 80 C by way of housing loan principal repayment.
But there is a possibility of utilising a portion of the life insurance premium paid by availing the benefit under Sec 80 D of the Income Tax Act. Sec 80 D of the Income Tax Act provides for deduction of premium paid towards Health Insurance from your total income. If the insurance policy covers "critical illness", then the premium portion attributable to the critical illness cover can be deducted u/s 80 D of the IT Act instead of claiming it under Sec 80 C. Normally we deduct the total premium on life insurance policies under sec 80 C but it is possible that we get few extra thousands deduction from taxable income if you have a policy with critical illness rider.
You have to contact your Life Insurance company and ask for the premium break-up details between the mortality charges for the life cover and the critical illness cover. Few of the insurance policies you have taken already has a "critical illness" rider attached to it. Going forward, when you opt for a life insurance cover you have to do a cost benefit analysis of having a critical illness rider considering the additional deduction possible under Sec 80 D of the IT Act.
Get a premium certificate from the life insurance company stating clearly the amount of premium charged for critical illness cover and claim it under sec 80 D and avail extra tax deductions.
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1 comment:
The matchless answer ;)
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