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Tax Benefits In Endowment Insurance Plans

Published On Jul 08, 2021

The endowment policy operates on a yearly premium-based system, in which recurring payments are made for a set period of time, after which the investor receives a range of returns on his or her investment.

If one invests in an endowment plan, they will receive substantial profits as well as insurance coverage, but the list of benefits of an endowment plan does end there. Tax advantages are one of the most important components of an endowment plan.

In this article, we have compiled a list of different stages qualified for tax exemption in an endowment plan.

Tax Exemption On Investment

One of the most significant advantages offered to an investor under an endowment plan is that they will receive tax benefits as a result of his investment.

The premium paid by the investor up to Rs 1,50,000 is tax deductible, cutting their tax burden by lowering their taxable income. This is allowed under the Income Tax Act, Section 80 (C) (Section 80C of the Income Tax Act of India is a clause that points to certain expenditures and investments).

The tax-deductible benefit on the recurring payment of the premium is an extremely profitable clause for the investor.

Life Insurance Tax Benefits

The death benefit is the amount guaranteed by a policy and paid to the named beneficiaries if something unfortunate happens during the policy's term. The death benefit is often handed soon after the claim is filed, assisting them in meeting their daily costs.

The sum assured paid as Insurance coverage is free of tax ensuring that the beneficiaries can make use of the sum without any hassle.

Tax Benefit On The Benefit Payout

Furthermore, the returns that the investor would receive upon the maturity of the endowment plan are tax-free, as defined by Section 10 (D) of the Income Tax Act, which states that the amount of sum assured plus any bonus (i.e., the policy proceeds) paid on maturity, surrender, or death of the insured is completely tax-free for the receiver.

Take Away

An endowment plan along with serving the primary features of saving and Insurance cover, also offers tax free payouts. Thus, we can determine from our analysis that an endowment plan proves to be an impressively smart plan which offers multi fold benefits upon investing in it.

Also read 

Where Can My Family Raise An Endowment Insurance Claim?

Can I Get Any Discount When Buying Endowment Insurance Plans Online?

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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