LIC or Life Insurance Corporation of India provides term insurance buyers with 5 variable and affordable types of plans to align with their individual coverage needs. You may like to choose the LIC term plan that is most suitable for you from among LIC e-Term, LIC Amulya Jeevan – II, LIC Anmol Jeevan – II, LIC Bhagya Lakshmi, or LIC New Jeevan Mangal. Very easy to purchase online after thorough comparison and easy payment channels, these LIC term policies offer exciting tax benefits.
Here, we aim to provide a quick look at the different tax benefits of LIC terms plans. The article will also help you understand whether you are getting the best benefits from your LIC term insurance provider or not. Take a look.
Tax Benefits on LIC Term Plans
LIC term plans serve to be very beneficial for individuals looking for smart tax savings on their coverage plans. All policyholders of term insurance by LIC stand eligible for receiving the tax benefits permissible under the Income Tax Act, 1961. Regardless of which LIC term plan you buy, you can get tax deductions u/s 80C of the Act. In addition, you may look forward to getting further deductions amounting to INR 1.5 lakhs for premium payment. Theses deductions possible are under Section 10(10)D that relate to the amount received as maturity benefits after the tenure of the term insurance policy gets over.
Tax Benefits and Deductions Under Section 80CCC and80C
The following tax benefits are available for a claim under Section 80C:
The individual assesse and HUFs (Hindu Undivided Families) stand eligible for the benefits of tax deductions under 80C. In case of an individual assesse, the individuals themselves, the spouse of the individual assesse, as well as his or her children can get the said benefits.
Hindu Undivided Families
In the case of HUFs, all family members stand eligible for the benefits of tax deductions under 80C in reference to the LIC term plan. The permissible tax deductions may be claimed on the premium amount to a limit of 20 percent of the insured sum; this is permitted if the premium paid by the assesse across the financial year is above 20 percent of the agreed-upon insured sum of money. Alongside, an assessed may also claim tax deductions and benefits if the premium paid is less than 10 percent of the insured sum; this is possible for all policies issued to the assesse after or on April 1st, 2012.
In case you are the owner of an LIC term plan and are suffering from any specific ailment or a severe disability, then the tax benefits/deductions may be claimed in case the premium paid is less than 10 percent of the insured sum. For this purpose, the policy should be issued to your name after or on April 1st, 2012. Under Section 80CCE, you may claim tax deductions going up to a maximum permissible amount of INR 1.5 lakhs u/s 80CCC and 80C on your LIC term plan.
Is Your Provider Giving You the Best Benefits?
Even as you continue with the process of the purchase or renewal of an LIC term plan, it becomes important for you to assess whether you are getting the best benefits or not. Ascertain the entire coverage amount that your beneficiary will be getting post your death; typically, it should be ten times your current income to take care of the financial concerns of your family members after your death. Your insurance provider should be assuring the said amount in lieu of the premium payments being done by you.
It is also important to assess the Claim Settlement Ratio and ease of claim processing for your LIC term plan, you would not want your nominee to keep running from pillar to post to get the said amount later on. The benefits of a quick and seamless settlement of claims is provided by LIC on all its term plans – with a CSR of 98 percent, LIC is certainly the right way to go!
Given the many tax and other benefits of an LIC term plan, it is recommended that you buy it at the earliest. You may want to check out the LIC term life insurance plans available online on insurance comparison and aggregator sites like Coverfox.com for the sake of easy purchase or renewal. Go for the term insurance plan that provides the highest coverage at the least possible premium. However, as the cheapest plan may not be the one providing all the right benefits for you and your family, it is important to compare the features and benefits of all the five plans before zeroing on one.