What are the Tax Benefits On Child Insurance Plans in India?
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Do you know that child insurance plans allow several tax benefits? Would you like to avail the benefits under child insurance plans. Read on to know the various advantages of buying child insurance plans.
Every child deserves a bright future and it is the responsibility of parents to ensure that. So, what is the best way to protect the future of your child? Yes, you are right! You can protect the future of your child with a child life insurance plan offered by a reliable and trustworthy life insurance company.
A child insurance plan helps to build a corpus for the future of a child as well as it makes sure that the child receives financial aid in case of unexpected death of parents. Hence, with a life insurance plan, you can benefit from both the objective of saving a corpus for his/her future needs along with getting life protection. Thus, it serves the purpose of both investment as well as insurance within one policy.
By buying a child life insurance plan at the time of birth of your kid or when the baby is very young, you can ensure to have a lump sum amount as security for the child’s future. This way you can make sure that your child could pursue his/her preferred higher education and career goals with the money saved.
Further, being a regular life insurance plan, a child plan allows the additional benefit of ‘premium waiver’. As per this benefit, if the insured parent who buys the policy for their children dies suddenly during the term of the plan, the nominee – the child – is paid the benefits immediately. In addition, under child plans, unlike in other life insurance plans, the policy doesn’t terminate with the death of the insured. Rather it continues till the end of tenure of the plan without any premium payments made towards maintaining the policy.
Tax Benefits on Child Insurance Plans
We have already discussed the benefits of child education insurance offered by life insurance companies in India. These plans take care of all financial goals of a child even if the parents are no more. However, along with all the above mentioned child insurance benefits, they also provide tax benefits to the insured.
Tax Benefits under Section 80C of Income Tax Act 1961
The insured can avail yearly tax deductions of up to INR 150,000 under section 80C on the premium paid on a child insurance plan.
Tax Benefits under Section 10 (10D) of Income Tax Act 1961
Another tax deduction that the insured can avail is on the lump sum maturity amount of the policy. So, whatever maturity the nominee receives is also exempted from tax under this section. Thus, along with tax deduction on premium, tax exemption on maturity is also available under a child insurance policy.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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