Tax Benefits of Term Insurance Policy – Section 80C, 80D and 10(10D)

Term Insurance Tax Benefits Come Under Which Section?

The tax benefits on a term Insurance policy come under sections 80C, 80D and 10(10D) of the Income Tax Act of India. Read the list below to know about the maximum limit along with the conditions that you need to meet to get the tax deductions under these sections:

Section of the Indian Income Tax

Tax Benefits

Conditions and Other Details

Term Insurance Tax Benefit under Section 80C

Tax deductions up to ₹1.5 Lakh on your premium amount in a financial year

If the policy is purchased before 31 March 2012 and the total paid premium is lower than 20% of the assured sum, you can get the benefit. For policy purchased thereafter, the upper threshold of total premium becomes 10% of sum assured.

Term Insurance Tax Benefit under Section 80D

Tax deductions for up to ₹25,000 on your premium amount in a financial year. However, senior citizens can get a tax deduction for up to ₹50,000.

If your term plan comes with riders like critical illness cover, the policy will come within the health category, and you will be able to get the tax benefit.

Term Insurance Tax Benefit under Section 10(10D)

The section gives tax exemption with no upper limit. The amount you get as death benefit will remain excluded from the income tax obligations.

If you purchased your policy before 31 March 2012, and the total paid premium amount is below 20%, you will get the benefit. The upper threshold will be 10% for policy purchased thereafter.

Term Insurance Tax Benefit on Its Claim Amount

FAQs about Term Insurance Tax Benefits:

Who will be able to get the tax benefit under Section 10(10D)? up-arrow

The section 10(10D) provides tax exemption on the death benefit of the term insurance policy. The nominee of the policyholder will get the tax redemption under this section, not the policyholder. This is because, nominee is the person who gets this amount after the demise of the insured individual.

Under which condition can I get excluded from the tax benefit under Section 10(10D)? up-arrow

You can not get the tax benefit under Section 10(10D) if the policy meets the following condition:

  • Purchasing date of the policy is on or before 31st March 2012, but the sum assured amount is more than 20% of total amount paid as premium

  • Purchasing date of the policy is on or after 1 April 2012, but the sum assured amount is more than 10% of total amount paid as premium

When can I raise my claim for the term insurance tax benefits? up-arrow

You can raise your claim for the term insurance tax benefit while filing Income Tax Returns (ITRs). Every financial year, the government of India sets a deadline for tax-paying citizens to file ITRs. You need to file it within that stipulated time frame.

Which documents will I have to submit while filing ITR to get the term insurance tax benefit? up-arrow

You need to submit or attach the following documents while filing ITR to get the term insurance tax benefit:

  • Receipts of your paid premiums of term insurance policy
  • Policy papers
  • Photo ID proofs