Sound financial planning is undeniable for a secure and stress-free future. Along with savings and investments, you need to address the taxation also. Buy a term insurance policy from Axis Max Life Insurance Company while getting up to Rs. 1.5 lakh in tax deductions under Section 80C. This cost-effective plan guards your loved ones against life’s uncertainties and eases your tax burden at the same time.

Whether you want significant coverage or a plan that fits a modest budget, these term policies are built to provide all-around protection and peace of mind. By paying a manageable premium, you can reduce your taxable income and stay ready for whatever life brings. It is a straightforward solution that blends financial safety with tax efficiency, giving you the best of both worlds.

How Term Insurance Reduces Your Tax Liability 

When you purchase a term policy, you can claim deductions on the premiums you pay each year. These deductions are offered under Section 80C, which sets a limit of Rs. 1.5 lakh. People in higher tax brackets (like 30%) find that the money saved can be substantial over time. Besides the premium deduction, the sum assured that the nominee receives after the policyholder’s demise is also tax-free under Section 10(10D). 

Tax saving is important, but it should not be the only factor. Life cover is the main reason for buying a policy. If the policyholder dies, the insurer pays the nominee a sum that can handle big-ticket expenses or day-to-day bills. This protects the family from dipping into savings or selling assets to stay afloat. 

Old vs. New Tax Regime - Which One Helps You Most? 

The distinction between new and old regimes is based on income, deductions, and money objectives. They both have distinctive characteristics. The old regime provides approximately 70 deductions and allowances under the Income Tax Act, such as HRA, LTA, Section 80C, Section 80D, and home loan interest. On the other hand, the new regime gets you limited deductions, primarily a standard deduction of Rs. 75,000 for salaried individuals. 

The old regime has tax slabs with rates of 5%, 20%, and 30%. Meanwhile, the new one has broader and more graduated slabs with rates of 0%, 5%, 10%, 15%, 20%, 25%, and 30%. Thus, you can see both regimes have their own features. However, anyone serious about building a secure future through term insurance usually finds the old regime more rewarding regarding tax deductions. 

Choosing the Right Term Plan to Maximise Tax Benefits and Protection 

While saving on taxes is a great incentive to buy term insurance, choosing the correct sum assured is even more important. No one wants to be underinsured, especially if there are large loans or multiple dependants involved. A general rule of thumb is to cover at least ten times one’s annual income, though some go for more. For instance, a person earning Rs. 10 lakh per year might look at a cover of Rs. 1 Crore or higher. This ensures enough funds for family members to settle outstanding debts and handle future costs. 

Among various options in the market, Axis Max Life Insurance remains a preferred choice due to its 99.65% claim settlement ratio. For those who want a standard, comprehensive cover, the Axis Max Life Saral Jeevan Bima Plan is a good option. If you like more features, you could explore the Axis Max Life Smart Secure Plus Plan or the Axis Max Life Smart Total Elite Protection Plan, both of which allow adjustments like joint life cover or riders. For even more flexibility, Axis Max Life Smart Term Plan Plus might fit well, mainly if there is a need for higher sums assured. 

When Should You Buy Term Insurance to Get Maximum Tax Benefits? 

The sooner, the better. Insurance premiums increase with age, and purchasing a term plan early means locking in lower premiums while ensuring eligibility for tax benefits every financial year. 

A 25-year-old buying a Rs. 1 Crore term insurance plan might pay Rs. 500-600 per month. But if they wait until 35, the premium could jump to Rs. 900-1,200 per month, leading to a significantly higher total outlay over the policy term. 

Additionally, premium payments made every year are eligible for deductions, making term insurance an excellent long-term tax-saving tool. 

Understanding Tax Exemptions with Term Insurance Plans 

When thinking of a term insurance tax exemption, it is important to look at the fine print. Section 80C deductions on premiums apply only if certain conditions are met. For instance, the sum assured might need to be at least ten times the annual premium. Anyone choosing to pay a higher premium for a more minor cover could risk losing out on the full deduction. Tax experts advise checking these details before finalising the policy to ensure eligibility for deductions under the old regime. 

Another advantage concerns the payout. The insurance company pays the nominee if the policyholder passes away during the term. According to Section 10(10D), this money is typically free from tax. This arrangement means the family does not lose a portion of their claim to taxes. Many individuals see this as a second benefit that goes hand in hand with the first. While the policyholder is alive, they can claim deductions on premiums. When they are gone, the payout reaches the family with minimal tax implications. 

So, Should You Invest in Term Insurance Plans? 

A term life insurance policy is a smart financial decision. During your investment, it gives you tax benefits, and in case of your demise, it provides monetary aid to your family. Add to that the potential for lowering taxable income, and you have a solution that tackles security and finance. With Axis Max Life Insurance, you receive policies that accomplish both these objectives, enabling you to handle your commitments more confidently and save on taxes simultaneously. 

**Standard T&C apply 

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale. 

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Note: The tax benefit is subject to change as per prevalent tax laws.**