Does Your Life Insurance Offers Tax Benefit?

View Comments

• Dear Amit,

  I'm 29yrs and availed LIC endowment plan-14 on 13 June 2011. Sum Assured = 3,00,000, Policy term = 5yrs, Premium payment term = 5yrs & Premium mode = Quarterly(Rs.16,211). On maturity I received sum = 3,47,490 (which is after TDS from 3,51,000 - 3,510). Now, Is maturity amount 3,51,000 is taxable under other income. If not, how to get exempted during tax filling.

  Thanks in advance !
  Deepak

  • Check 1: If the sum assured is more than 5 times of annual premium paid (before service tax) and
    Check 2: You have paid at least 2 year premiums
    If answer to both question is YES then the amount received is tax free else its fully taxable.
    Check more details @ How are ULIP & Life Insurance Policies Taxed on Surrender & Maturity?

• LIC deduct TDS on maturity of my LIC under section 194C How i will show it in my income tax return

  • If your maturity or surrender amount is taxable you will have to show it as "income from other sources" and pay full tax accordingly. In case the maturity value was tax free, just include the same in tax exempted income and show the TDS in tax paid. If extra TDS has been deducted, you'll get the refund.

• I have ulip plan of bajaj 2007. Premium 20000 sun assured 200000 but i have deposited top up 4 times 40000. Is partial withdrable and maturity texable

  • The maturity amount should be tax free. Check more details @ How are ULIP & Life Insurance Policies Taxed on Surrender & Maturity?

• Hi Amit,

  I have purchased a life insurance (ULIP) from ICICI Prudential in December 2016. The premium is 1 lakh per year (10% of assured amount) and sum assured is 10 Lakhs. The policy terms is 10 years with a 5 year lock in period.

  Can you please help me understand the following:

  a) if there will be any tax implication if I withdraw the money after 5 years of lock in period and

  b) also what is the tax implication if I withdraw money after 10 years term.

  Please advise.

  Thanks,
  RK

  • There would be NO tax on both the cases as the sum assured is 10 times premium paid.

    • Thanks Amit.

      Will the no tax apply even if the policy holder is a NRI. Please suggest.

      • Yes No tax for NRIs too

• Hello sir , i had a LIC life insurance policy which are matured after 15 years (Since 2000), Which premium is Rs.129600 & sum assured is Rs 8 lacs. At time of maturity bank has deducted 10% TDS on interest part. Sir, Is that taxable or not?

  • There should have been no TDS on this policy and the TDS rates are 1% & not 10%. As I understand your policy maturity amount should not be taxable!

• Say,I take an ULIP for sum assured of 10,00,000 for an annual premium of 1,00,000. Suppose, I discontinue the premium payment after paying first installment. will the maturity proceeds be taxable after 5 years?

  • For ULIPs you need to pay at lease 5 year premiums for the amount to be tax free. Check more details @ How are ULIP & Life Insurance Policies Taxed on Surrender & Maturity?

• i have unit linked policy whos prmium is 10000 and SA is 300000 i bought it in 2007
  i am paying the premium regularly i want ot encash it will the amount be taxable

  • The surrender amount would be tax free!

• I have a SBI ULIP plan which i took in 2008 with an annual premium of 1 lakh per year and the policy tern is 20 years. The sum assured is 10 lakhs. i have already paid 9 premiums and want to surrender the policy. The surrender value is approx. 12lakhs. Will i get the tax benifit under section 10(10D). Please clarify

  • Yes the maturity amount would be tax free

• I took a LIC policy for US$6,000 on 28-11-2005 from their Bahrain operation, while working in Saudi Arabia.In 2009, I became a resident of India and transferred the policy to India at the then existing exchange rate of 46.71 Rs = 1 US$. This policy got matured on 28-11-2015 and the LIC deducted Rs 7,354/- from the final payment. When I took the Policy, I was verbally assured that the final payment will be Tax Free but now I understand the total payment of this Policy is Taxable income. Kindly advise

  Regards, Jacob

  • Sorry to hear that. The miss-selling problem is rampant in insurance industry and unfortunately you are one of the victims of the same. Verbal promises means nothing. So you have to ideally pay taxes on your maturity!

• Hi Sir,

  I have PLI of Rs.5,00,000 SA. Monthly premium is Rs.1375 (+Rs.26 Tax=Rs.1401). Taken in October-2012. Now, I want to surrender the policy.

  1) Does 80C Tax reversal applicable in my case ? (nearly 47 months paid)

  2) Will thereby any tax deducted on Surrender Value.?

  3) Do I need to mention Surrender Value in my Assessment under income.?

  4) Can I claim under 80C for the premiums of 6 months (Apr-2016 to Sep-2016) paid in this FY 2016-17 in ITR even if I surrender the policy in October 2016.?

  Thanks & Regards,

  Raghav

  • 1. No Reversal as paid more than 2 years premium
    2. No TDS
    3. Surrender value can be mentioned as exempted income
    4. Yes you can claim 80C benefit for all premiums paid in a year.

    Check more details @ How are ULIP & Life Insurance Policies Taxed on Surrender & Maturity?