How to Save Tax on Salary with Term Insurance?

As a salaried individual, it’s always a little tiring to see a significant portion of your hard-earned salary disappear into the depths of tax deductions. Month after month, you can see a portion of your pay check diminishing and out of your reach.

Are you wondering how to save income tax on salary? Do you wish there was a way to hold on to more of your income? One of the best ways to do this is by investing in a term insurance plan! It is a wise strategy that not only helps you save tax on your salary but also helps you create a financial safety net for your loved one against life’s uncertainties.

In this article, we will explore the ins and outs of how to save tax on salary with term insurance.

Let’s Begin by Understanding Term Insurance!

When it comes to protecting your loved ones and ensuring their financial security, term insurance is a smart choice. It is the most simple and affordable type of life insurance and provides a crucial replacement for your income in your absence.

If you, unfortunately, pass away while your policy is active, the insurance company will provide a sum of money to your family, which will replace your income and safeguard your family's financial well-being. Your loved ones can continue pursuing their dreams and maintaining their desired lifestyles without any compromise.

It's important to note that term insurance is a pure risk cover and will not pay any benefits if you survive the policy term.

Tax Saving Options For Salaried Individuals

Term insurance provides a protective shield for your loved ones and is a strategic financial tool with significant tax advantages¹ on the premiums you pay under the following sections of the Income Tax Act of 1961 -

1. Section 80C

The yearly premiums paid towards term life insurance policies can attract tax deductions up to Rs 1.5 lakhs. This deduction can prove beneficial for salaried individuals, as it can result in substantial tax savings.

2. Section 80D

This section typically provides tax benefits¹ for health insurance premiums, but if you opt for health-related riders² like the critical illness rider, hospital care rider, surgical care rider, etc., with your term insurance plan, you can claim tax deductions on the premiums you pay for them. The maximum tax deduction you can avail of under Section 80D for these premiums will vary depending on your age and the age of your family members.

Please note -

• The limits for tax deductions could change depending on the Income Tax Act, 1961.
• If you are paying premiums in full, including taxes, you are eligible to avail of tax deduction under Section 80D. However, please note that cash payments for premiums are not eligible for tax deductions.
• Ensure that you make premium payments to an insurance company authorised by the IRDAI (Insurance Regulatory Development Authority of India) in order to claim tax deductions.

Looking For Term Insurance? Consider ABSLI Salaried Term Plan [UIN: 109N141V01]!

ABSLI Salaried Term Plan is tailored exclusively for you, a salaried individual seeking comprehensive protection. With the freedom to customise your plan according to your specific needs, this solution offers both lump sum and monthly income options. Whether it's ensuring your child’s education, maintaining a comfortable lifestyle, or meeting everyday expenses, this pure-risk term plan is designed to provide unwavering financial support. It empowers your family to embrace the future confidently in case the unexpected happens.

Some of the Key Features of the Plan:

• Choose from a diverse range of 4 plan options to match your unique protection needs perfectly.
• Enjoy life insurance coverage that spans up to age 70.
• Select from versatile options for death benefit payouts, whether you prefer a lump-sum or monthly income.
• Additional protection with the inclusion of an inbuilt terminal illness benefit.

Wrapping Up!

By implementing smart tax-saving strategies and investing in term insurance, you can not only save money on your salary but also ensure the financial security of your loved ones.