There are several important aspects of your personal finances that you should always aim to prioritize and they include ensuring you make the most of tax benefits to reduce what you pay and putting arrangements in place to secure your financial future.
Taking out the right amount of life insurance coverage is often necessary to provide a financial safety net for your loved ones if you are no longer around to take care of them, and searching out the best term plan will help you to do that as efficiently as possible.
Another key point to consider is that there are tax benefits attached to arranging life cover when your earnings exceed 15L per annum.
Life cover with added benefits
There is already a compelling argument in favour of arranging life cover when you consider the peace of mind and financial protection it provides, but there is the added benefit of tax benefits too.
When you arrange life insurance cover and your annual income meets the required threshold you could claim tax benefits on your income in relation to the premiums you pay for that coverage.
Section 80C of the Income Tax Act allows you the opportunity to save tax by investing in a life insurance policy and there are other benefits to consider too.
When your life insurance policy matures
Another aspect of the taxation system gives you additional benefits that are well worth having such as when your policy matures, and Section 10 and 10D of the Income Tax Act also outline potential tax benefits related to your earnings associated with the life insurance policy.
As well as the premiums you pay being eligible for tax deductions under Section 80C of the Income Tax Act, the death benefit paid to your chosen nominee will also be exempt from taxation under Section 10 and 10D of the current taxation laws in force.
At various stages of your life, you can also enjoy a certain level of basic income tax exemption on your insurance premiums. Your financial adviser or insurance representative should be able to outline the tax benefits relevant to your income and financial circumstances.
Making your money work harder
Whatever line of work you are in and regardless of whether you are an employee or run your own business, there will be taxes to pay when your income exceeds a certain threshold.
It makes sound financial sense to invest in plans that offer tax-saving opportunities and life insurance products are one of the ways to ensure that the money you earn goes as far as possible by reducing your tax burden.
You can be sure that you are making your money work harder when you invest in a financial instrument that allows you to save taxes and delivers definite benefits in terms of financial security and potential growth when it comes to achieving a positive return.
Know that you know the tax benefits attached to life insurance isn’t it time you took full advantage?