You may be aware of the Section 80C tax deductions available for term insurance premiums. However, you should also be aware of deductions available under Section 80D that can be used for term plans along with Section 80C.
Under this section, you can claim a tax deduction against the premium paid toward a health insurance policy. The policy can be for yourself, your spouse, children, or dependent parents. Deduction claimed under Section 80D is over and above the Section 80C deductions.
You can now claim tax deductions under Section 80D on your term insurance if you include additional health riders like critical illness cover with it.
How Much Amount Can You Claim for Tax Deduction Under Section 80D?
Section 80D deductions can be broadly divided into two categories of term insurance.
For You, Your Spouse and Children
You can claim a total deduction of Rs 25,000 for the premiums paid toward term insurance for you, your spouse, and your children, where everyone is below the age of 60 years.
For Your Senior Citizen Parents
If both of your parents have attained the age of 60 and you purchased a term plan with a health rider for them, you can claim an additional deduction of Rs 50,000 under Section 80D.
Therefore, you can claim tax benefits up to Rs 75,000 under this Section depending on your eligibility mentioned above.
How to Claim Tax Benefits for Term Insurance Under Section 80D
Since Section 80D deductions exclusively deal with health insurance, you are unlikely to get any tax exemption if your term insurance plan doesn’t have any health cover. Therefore, make sure you have at least one health rider included in your term plan.
Most reputed term plans provide critical illness riders covering major ailments like cancer, cerebral haemorrhage, etc. Such riders can help reduce financial stress in times of medical emergencies. Therefore, you can consider including these optional riders for the benefits they offer apart from the purpose of tax saving.
You can also consult your insurance provider to clear away any doubt regarding whether you can claim Section 80D benefits on certain riders.
Once you are certain of the tax benefits, you can claim them while filing your annual income tax return.
- During the online filing of returns, find the field that allows you to claim deductions under Section 80D.
- Input the amount as per your eligibility.
- Submit the ITR form.
Any mistake in filing your ITR can result in you losing the tax benefits or even make you liable for penalties. Therefore, take your time and complete the filing process only after you are assured of the numbers. You can also consider taking the help of a financial advisor if you have any doubts.
A term insurance plan offers insurance benefits at a very low price, making it an affordable addition to your portfolio. The additional income tax benefits under Sections 80C and 80D make it a further lucrative deal to secure your family’s future.