Single premium life insurance (SPLI) policies are also available, and they offer the same advantages of security and cost-savings as normal premium policies. The SPLI’s term is typically ten years but one may 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 of ten times, the tax benefit is lost.
Investors typically choose a lower life cover because of the lower incidence of mortality charges, i.e. the cost of providing life insurance. The lower the deduction for mortality charges, the more funds are available for investment. Even though the mortality charges in a policy with 10 times the sum assured will be higher than in a policy with 1.25 times the sum assured, keep in mind that the tax benefits are lost in the latter.
The SPLI appears to have gained popularity in recent years. But, as a buyer of SPLI, are you taking advantage of the various tax breaks available? Will your policy’s Section 80C benefit be available, and will the maturity proceeds be tax-free? Check because not all SPLI available from life insurers are structured to help you take advantage of such tax benefits. It is better to be aware of the tax rules before you lose such benefits.
この記事は Investors India の March 2023 版に掲載されています。
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この記事は Investors India の March 2023 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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