Manage Your Taxes Better, Through Insurance

Updated: Thursday, December 31, 2015, 13:24 [IST]

India is an under penetrated insurance market. Of course, apart from motor insurance, which is compulsory, our health and life insurance has not found an appeal, especially in rural areas.

Though, motor insurance is required as per law, we never claim for the absurd. In fact, in western countries they file an insurance claim for all sorts of things. And some of the claims are seriously hilarious. Take the lady who made a claim for cow damage.

Manage Your Taxes Better, Through Insurance

She had parked her car under a berry tree and when she returned cows were licking the car to suck off the berries that had fallen on it. The cows' rough tongues had caused scratches to the paintwork.

In another real claim form involving car accidents, one individual wrote: "The car in front hit the pedestrian but he got up so I hit him again."

In India we may not have reached that stage. In fact, from thumbs to cigar, you could find all kinds of things insured abroad. Talking of cigars, you must read this one.

A Charlotte lawyer, appreciating the value of a good cigar, insured his 24-pack of rare and expensive cigars through his homeowners insurance.

A month later, having quite happily smoked them all, the man then filed a claim with his insurance company to reimburse him for the cigars. His claim? That they had been lost "in a series of small fires", which was more than covered under his homeowners insurance policy.

In India, individuals usually tend to ignore the insurance part when financial planning. Some individuals do not think it is necessary to have an insurance policy. While, others are happy with whatever the company is offering in the name of insurance.

Insurance plays an important role when planning your finances for future needs. Smart individuals buy insurance plans which will reduce the worry and save money as they are eligible for tax benefits. There are different insurance plans which fall under 80C, 80CC and 80D under Income tax act.

Here is a glance of insurance plans which you can consider buying and save tax.

1) Life Insurance

Life insurance will take care of all the expenditure of the family in the absence of the policy holder. It is a must for the earner of the family. So that there will be no shortage of income even in the absence of the earning person. Life insurance products comes in different forms such as ULIPs, endowment plans, money back plans, term plans. Click to buy Insurance Plan , Health Insurance

Tax Benefits

The premiums paid on these policies are eligible for tax deductions under 80C. Individuals can avail maximum deductions up to Rs 1.5 lakhs. The maturity or bonus amount will be tax-free in the hands of the holder on maturity or death under Section 10 D.

Click to compare and buy pension plans and Check Your Eligibility & Tax Benefits.

2) Pension Plans

Pension plans have two phases: one is accumulation phase and other is withdrawal phase. Accumulation phase is the phase where the initial accumulation of premium payments in earning years.

Note that tax benefit is applicable on the premium payments of the accumulation phase. Click to compare and buy pension plans.

Tax Benefits

a) Tax benefit under Section 80CCC which is sub-section under Section 80C

b) The maximum limit under 80CCC is raised to Rs 1.50 Lakh

c) Only one third of the accumulated amount is eligible to be tax-free and the balance of two third will be treated as income. The amount will be tax-free upon the death of the beneficiary.

3) Mediclaim

In the event of accident or hospitalization, mediclaim of any health insurance will take care of the expenses incurred. For individuals, maximum deduction eligible is Rs 15,000 on premium paid. This budget 2015, mediclaim insurance benefits are increased for the senior citizen, and the amount is increased to Rs. 20,000. The tax benefit is eligible under 80D of Income tax act.

Effective Ways To Provide Medical Care To Your Family. Click to Calculate Premium Now.

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