Living a planned life is equivalent to gaining the upper hand. The majority of life's goals may be attained with excellent planning and execution. They need to have a strategy for their lives as well as be ready for unforeseen events. Medical emergencies can occur unexpectedly, at any time, so being prepared with enough resources is essential. That's where life insurance and health insurance plans, two fundamental insurance products, come into play.
When the insured person is not present, life insurance serves as a safety net for the family, whereas the best health insurance policy enable the insured to receive prompt medical care without worrying about their financial situation.
Did you know that you can claim benefits from both of these programmes on your tax return? The tax advantages provided by these two policies differ from one another, just as there is a clear disparity between the coverage provided by these two insurance plans. The tax deduction for each of these plans varies in the following ways:
Different deductions are allowed for the premiums paid for both insurance plans, according to the Income Tax Act of 1961. While the Act's section 80C allows for the deduction of life insurance premiums, its section 80D allows for the deduction of health insurance costs. As a result, if you have both insurance policies, you can claim tax benefits in various areas of your income tax return. Additionally, keep in mind that the premiums paid for these insurance plans do not reduce the tax amount; rather, the tax is calculated on the total sum.
Deductions For Life Insurance Plan Premiums
- Section 80C states that the premium paid is only deductible from your net tax liability when the following requirements are met:
- Either an individual or a member of the Hindu Undivided Family is the taxpayer requesting a deduction (HUF).
- Along with other possible deductions, the maximum deduction allowed by this clause is Rs. 1,50,000.
- You may deduct the cost of life insurance policies purchased for you, your spouse, or your children under section 80C.
- There are various life insurance options available, including endowment plans, term plans, and even ULIPs.
- There is a restriction on the reversal of any tax deductions in some plans, such as ULIPs and endowment plans, if the policy is surrendered within five or two years, respectively.
Please take note that tax benefits could alter depending on how the law is written.
Deductions For Health Insurance Plan Premiums
The deductions for health insurance policies are governed by Section 80D of the Income Tax Act. Here are some essential things to keep in mind:
- A person or HUF may deduct the cost of any premiums paid for health insurance plans, just like for life insurance plans.
- A personal accident cover is the only type of health insurance that is not eligible for a tax deduction (exempt from taxation) under section 80D of the Act.
- The age of the insured beneficiary determines the maximum qualifying deduction.
- Within the higher limitations designated for health insurance policies, there is also a sub-limit available for preventative health checkups.
- For the premiums to qualify as a deduction, they must be paid in a method other than cash. Cash payments are accepted for preventive health exams, nevertheless.
These are some differences between the deductions allowed for life and health insurance premiums. Health insurance plans, whether an individual plan, family floater plan, or even a health insurance plan for senior citizens, pay for your medical treatment without you having to worry about the cost of the treatment, in contrast to life insurance, which provides financial support to your dependents. The topic of the solicitation is insurance. Please carefully read the sales brochure/policy wording before closing a deal for more information on advantages, restrictions, limitations, terms, and conditions.
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