Buy insurance online and save taxes

Insurance is synonymous with financial security as insurance plans compensate for the financial loss that you suffer in an unforeseen contingency. That is why insurance plans are a must if you want to be financially secured. 

When it comes to insurance, two of the most important insurance plans are term life insurance plans and health insurance plans. While term insurance plans are life insurance policies, health insurance plans belong to the general insurance category. Let’s understand both these plans in details, their benefits and how they save taxes –

Term insurance plans

Term insurance plans cover the risk of dying too early. If the insured dies during the term of the policy, the policy pays the sum assured to the family thereby providing the family financial support when the bread-winner dies. This financial support helps families meet their financial needs even in the absence of the main income earner.

Benefits of term plans

• They fulfill the need for income replacement if the breadwinner dies

• The plan provides a sense of financial security to the insured as well as his/her family in unforeseen situations

• The premiums of the plan are very low which allows you to afford a high sum assured to provide substantial funds to your family if you are not around

Health insurance plans

Health insurance plans cover medical contingencies and compensate you for the financial loss suffered if you incur huge medical bills. If you are hospitalized for any medical contingency, health plans cover your medical bills. 

Health insurance benefits

• The medical costs can burn a hole in your pockets. A health plan covers these costs and prevents any financial burden that you might suffer.

• There are different types of health insurance plans for covering different types of insurance needs that you might have

• Fixed benefit health plans give you financially give you a lump sum benefit in case of claims. This benefit helps you meet any financial liability that you suffer in a medical contingency

How to buy term insurance and health insurance plans?

Both term and health insurance plans are available online. You can compare and choose the best policy as per your coverage needs. When comparing insurance plans, compare their coverage benefits vis-à-vis the premium amount and then buy term insurance policy which has the most comprehensive coverage benefits at the lowest premium rate. Moreover, when you buy term insurance or health insurance online, make sure to opt for an optimal coverage level so that the plan provides sufficient coverage to meet the expected financial loss.

Tax benefits

Both term and health insurance plans give you tax benefits. Let’s understand what they are –

• Premiums paid for a term plan are allowed as a deduction under Section 80C. You can claim a deduction of up to INR 1.5 lakhs under the Section. 

• Premiums paid for health insurance plans are allowed as a deduction under Section 80D. The maximum deduction is INR 25,000 which increases to INR 50,000 if you are a senior citizen. Moreover, if you pay a premium for a health insurance policy for your dependent senior citizen parents, you can claim an additional deduction of up to INR 50,000.

• The death benefit received under a term insurance plan is completely exempted from tax under the provisions of Section 10 (10D) of the Income Tax Act, 1961. Thus, the benefit received from a term insurance plan is a tax-free income for your family which can be used for their financial needs.

Thus, both term and health insurance plans offer you tax benefits and help you save taxes. Premiums paid towards both these policies reduce your taxable income and consequently your tax liability. So, understand these term insurance and health insurance benefits and invest in these plans to secure your financial future.