Term Insurance Tax Benefits - Sections 80C, 80D & 10(10D) Explained

You can claim deduction up to ₹1.5 lakh per financial year for premiums paid toward your term plan.

Eligibility:

• The policy must be in your name, your spouse’s name, or your children’s name.
• Maximum limit: ₹1.5 lakh combined across all 80C instruments (e.g., PPF, ELSS, EPF, etc.).
• Applies to both salaried and self-employed taxpayers.

Conditions:

• Annual premium ≤10% of the sum assured (for policies issued after April 1, 2012).
• For policies issued before that date, limit is 20%.
• If the policyholder surrenders within 2 years, deduction claimed earlier becomes taxable.

Example:

If you pay ₹20,000/year for your term plan, you can deduct that full amount under Section 80C - reducing your taxable income.

The death benefit (sum assured paid to nominee) and maturity benefit (if applicable, like in TROP) are completely tax-free under Section 10(10D).

Conditions for Tax-Free Status:

• Annual premium ≤10% of the sum assured (for policies issued after April 1, 2012).
• If exceeded, the excess portion becomes taxable.
• Applies to both Indian residents and NRIs.

Example:

If your nominee receives ₹1 crore death benefit, the full amount is exempt from tax - no TDS, no income tax, no filing required on it.