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Can I Avail Tax Benefits On Riders Bought With Life Insurance?

Updated On Jul 10, 2021


Purchasing life insurance coverage is important for you, especially if you are your family's sole breadwinner. Your husband, parents, and children rely on you for financial security.If something were to happen to you, your loved ones would not only have to deal with the emotional anguish, but they would also have to deal with financial difficulties. However, with a life insurance policy, you can provide financial security to your family in the future. At the same time, you can benefit from long-term life insurance tax breaks.

If you are living under the myth that you can't get life insurance tax breaks from private insurers, you're wrong. You are qualified for the Section 80C deduction if you purchase a life insurance policy from an insurer that is approved by the Insurance Regulatory and Development Authority of India.

  • The income tax benefits of a life insurance policy are included in Section 80C of the Income Tax Act of 1961. The premium you pay for your life insurance policy is deductible under Section 80C under this Section. 
  • In addition, you can maximise your life insurance tax benefits by purchasing a life insurance policy for your spouse or kid.
  • The Ministry of Finance has set various restrictions on the income tax benefits of life insurance policies. To qualify for a tax credit under Section 80C, the premium on a life insurance policy should not exceed 10% of the life cover or sum assured if issued after April 1, 2012.
  • But, if your life insurance policy was purchased before April 1, 2012, you may be eligible for an income tax deduction if the premium charged is less than 20% of the chosen life insurance.

The Exemptions Under Section 10(10D) of The Income Tax Act

The exemptions, like the tax deductions available on a life insurance policy, are based on the date of bond issuance of the policy. The exemptions apply to insurance payouts and are an important component of life insurance tax benefits. 

Income tax advantages can also be obtained for a life insurance policy purchased after April 1, 2013, for a person with a disability or disease listed in Sections 80U and 80DDB, respectively. 
According to the circular, the only requirement is that the premium be less than 15% of the total assured.

Tax Benefits On Health Riders

Health riders are typically a defined-benefit health insurance plan in which the insurer pays the total sum insured or a portion of the sum promised based on the incidence of a particular illness as specified in the policy paper. 

The premium paid for a healthcare plan, which could be in the format of riders in a life insurance plan, is deductible under section 80D up to Rs 25,000 (Rs 50,000 for senior persons) in a fiscal year, according to the provisions indicated therein. 

Your premium paid statement will provide a breakdown of the premium paid under sections 80C and 80D. Health riders such as Critical Illness (CI) Rider and Waiver of Premium Benefit on CI can be added to your policy to receive tax benefits. 


A life insurance coverage not only protects your loved ones financially from unanticipated events, but it also provides tax advantages. It is simple and painless to claim the full life insurance tax benefits. All you need to know is which types of life insurance policies qualify for tax breaks, how much you can save, and when and how to receive benefits. Choose the best policy for your family, attach the needed cost effective riders and avail tax benefits. 

Also Read: All About Riders In Life Insurance Plans

Difference Between Waiver of Premium and Income Benefit Rider

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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