Insurance and tax saving – what do your customers want to know?

“In this world, nothing can be said to be certain, except death and taxes.”

– Benjamin Franklin

Tax season is around the corner and for all who fall into the bracket of taxpayers, this is a busy season! Some of your customers may already be familiar with tax-saving avenues like PPF, Mutual Funds, FDs, and donations. For those who require assistance, as their advisor and as an Asego superhero, you will most certainly make them aware of the tax-saving insurance policies so that taxes do not take a toll on their finances.

Which are some of the insurance policies that could help your customers save tax and grow wealth? Let’s read on.

Life insurance

What’s in a name? Well, when it comes to life insurance, the name says it all. A complete life and financial cover for your customers (the policyholders), that offers financial assistance to customers’ families, under unfortunate circumstances. This plan can be purchased for spouses, dependent parents, or children. Life insurance plans have their own categories in the form of endowment plans, term insurance plans, money-back plans, and ULIPs. If a policy is terminated within a stipulated time period, the tax-saving benefits get reversed. Tax deductions can be availed of on the premium paid for a policy under Section 80C of the Income Tax Act and death benefits can be availed under Section 10(10D). The maximum amount of exemption is Rs. 1.5 lakh and the minimum holding period of a tax-saving insurance policy is 2 years.

Health insurance

Health insurance is a plan that provides protection against uncertainties in life. It offers several benefits such as coverage against critical illnesses, financial security against rising medical expenses, and cashless claims, and is often considered to be one of the best investment options. With an increase in the number of lifestyle-related disorders, the focus on staying healthy has increased.

In addition, health insurance also offers tax-savings under Section 80D of the Income Tax Act.

i) Health insurance policy for parents: If your customers pay premiums for their parents, whether they are dependent on them or not, the maximum exemption that can be given is up to Rs. 55,000, if they’re above 60 years. When a taxpayer is 60 or above, the maximum tax benefit is Rs. 60,000.

ii) Health check-ups: If your customers pay the premium of Rs. 20,000 and a health check-up fee of Rs. 5000, a total benefit of Rs. 25,000 can be availed.

iii) HUF (Hindu Undivided Family), NRIs, or foreign residents: Tax benefits can be claimed if your customer belongs to any such category.

iv) No profit on cash payment: The Income Tax Act has not allowed tax benefits on premiums paid in cash. However, tax benefits can be availed if they use internet banking, cheque, or credit card.

Now would be a good time to help your customers with wealth creation and tax planning (and saving). You can also develop a trusting relationship with them in the process.

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