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The primary purpose of life insurance is to offer financial protection to your family by securing their future. But in retrospect, life insurance can also be an efficient way of saving tax.

When you invest in life insurance the government deducts the amount of premium you pay for the insurance policy from your tax payments. For a term investment , retirement plan, wealth plan, savings plan or an endowment investment, you can save up your tax on a maximum taxable income of Rs. 1 lakh per annum.

Following are the tax exclusions availed by a life insurance investor: 

1. Premiums: Under Section 80C of the Income Tax Act, 1961, all life insurance policy premiums are exempt from tax within a limit of Rs. 1 lakh per year. Also, the government deems any claim amount availed by the beneficiaries or a bonus of the policyholders as tax free under the Section 10 (10D) of the Income Tax Act.
2. ULIPs: Investments in ULIPs benefit the investor as market-linked policies that pose as insurance as well as investments are deducted from the person’s taxable income. 
3. Retirement plans: The government exempts a maximum of Rs. 1 lakh on premiums paid for pension plans under Section 80CCC of the Income Tax Act.
    

But one should also note that Section 80C covers investment from all kinds of health and life insurance premiums, wealth plans, government bonds, PPF investments etc. to a limit of Rs. 1 lakh per year. Thus, even if an investor pays premiums worth 1.5 lakhs for various policies, the most refund availed by him is of Rs. 1 lakh.
 

Thus, when you invest in life insurance , it endows you with security, but tax saving is the cherry on top.

*Tax benefits are subject to conditions and other provisions of the Indian tax laws and are subject to amendments made thereto from time to time.

Disclaimer:
The aforesaid article presents the view or an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision.

PNB MetLife India Insurance Company Limited, Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka.
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