Life insurance doesn’t necessarily mean a commitment to keep paying the premium every year.
There are single premium life insurance (SPLI) policies as well, which provides similar benefits of protection and savings as the regular premium policies. The term of the SPLI is usually ten years but one can exit after five years.
In SPLI policies, insurers define the minimum and the maximum sum assured on their policies. In most of them, the minimum sum assured is 1.25 times the single premium or even 1.10 times the single premium. The maximum sum assured is typically 10 times single premium for lower ages while for those above 35 or 45, even the maximum is 1.25- or 1.10-times single premium. So, unless one chooses to go with the maximum cover oftentimes, the tax benefit is lost.
Investors generally opt for a lower cover because of the lower incidence of mortality charges, i.e. the cost of providing life cover. Lower the deduction of mortality charges more will be the fund available towards investment. Even though the mortality charges in a policy with 10 times of sum assured will be more than a policy with 1.25 times of sum assured, remember, the tax benefits are lost in opting for the latter.
In the recent past, the interest in the SPLI seems to have increased. But, as a buyer of SPLI, are you getting the various tax benefits available on them? Will your policy be eligible to claim Section 80C benefit and will the maturity proceed be tax-free? Run a check as not all such SPLI available with life insurers are structured to help you avail such tax benefits. Before you lose out on such benefits, it’s better to be aware of the tax rules.
Being a life insurance policy, SPLI too qualifies for tax benefits, both under Section 80C (at the time of investment) and for making the maturity proceeds tax-free under Section 10 (10D). But one needs to be little careful while buying them otherwise both these benefits might not be availed.
この記事は Investors India の August 2019 版に掲載されています。
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この記事は Investors India の August 2019 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。
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