Securing a stable financial future is a priority for Gujarat’s middle-class families. The rising living costs, education, and healthcare mean protecting your income has become essential. In this context, term insurance is an affordable option to safeguard your loved ones financially. It also comes with several tax benefits, making it a compelling choice for a Gujarat resident. This article will discuss term insurance and the tax benefits you should know.

Understanding Term Insurance Plan

Term insurance is a straightforward and cost-effective life insurance policy that offers financial support to your family members in the event of your untimely demise. Since it does not provide a savings component, term insurance is generally more affordable than other types of insurance and allows you to secure a higher coverage amount. This means that, as a resident of Gujarat, you can easily secure the best term insurance plan that fits your needs to protect your family’s future by paying affordable premiums.

What are the Benefits of Purchasing Term Insurance in Gujarat?

The following are the key benefits of purchasing term insurance plans in Gujarat:

1.     Financial Security for Dependents

The term insurance plan ensures that your family members are financially protected in case of your untimely demise. It acts as a replacement for the income that would have supported your family if you were alive, offering coverage for essential expenses, like education costs, mortgage payments and daily expenditures.

2.     Optional Riders for Added Protection

When you opt for term insurance, you can enhance the coverage by adding riders, such as accidental death benefits, critical illness coverage, and more. Adding these riders to your basic term insurance plan makes it a versatile solution for various risks your family can face.

3.     High Coverage at Low Cost

Term insurance plan allows you to secure a large sum assured at a relatively low premium, making it accessible to middle-class families. It ensures that in case of your untimely death, your family receives adequate financial coverage. You can use a term insurance premium calculator to determine the premium amount according to your coverage requirements.

What are the Tax Benefits of Term Insurance in Gujarat?

Term insurance offers tax benefits under several sections of the Income Tax Act 1961. Here are a few tax benefits you can get after buying a term insurance plan in Gujarat:

1.     Tax Deduction Under Section 80C

Section 80C of the Income Tax Act, 1961, allows a deduction on the premium amount you pay towards the term insurance policy. It enables you to claim ₹1.5 lakh tax deductions per financial year.

2.     Tax Deduction Under Section 10(10D)

Under Section 10(10D) of the Income Tax Act, 1961, the sum assured received by your family in your absence is tax-free. This exemption is a significant benefit, allowing your family members to obtain coverage without tax deductions. It enables them to maintain their lifestyle and meet their financial requirements.

3.     Tax Deduction Under Section 80D

When you include additional riders in a basic term insurance plan, like critical illness coverage, you are eligible for extra tax deduction under Section 80D of the Income Tax Act. You can claim a tax deduction of ₹25,000, and a senior citizen can claim ₹50,000 under this section.

Final Words

Term insurance plans are more than just financial protection for Gujarat’s middle-class families. They are an opportunity to secure peace of mind, reduce tax liabilities, and prepare for life’s uncertainties. In addition, the tax benefits offered under various sections of the Income Tax Act 1961 make term insurance an attractive option. Overall, having a term plan provides the dual benefits of financial security and tax savings.