RPLI Plans were introduced in 1995 under the new postal life insurance schemes to cover the financial uncertainties of the rural Indian population.
Know Life Insurance Policy (LIC) Maturity Amount Taxable under Which Head?
Maturity amount is the sum of money received by a life insurance policyholder at the end of a policy term in case he/she survives the plan. Let us find out if the LIC maturity amount is taxable or not, in this post.
Life Insurance Corporation (LIC) of India pays a policyholder a sum of money as maturity benefit at the end of the policy term if the insured outlives the policy tenure. This amount is generally equal to the sum assured of the insurance policy at the time of maturity together with bonuses.
Let’s understand LIC maturity taxability by means of an example. Suppose you bought a life insurance policy of INR 10 lakh as sum assured for 10 years tenure. Now, when your tenure ends and if you outlive the policy period, LIC is likely to pay you the complete sum assured. This amount is called the maturity benefit.
The total sum assured received as maturity benefit for surviving a life insurance policy of LIC is tax-free including the bonus as per section 10(10D) of IT. However, there are some eligibility criteria or conditions that need to be fulfilled to enjoy the tax-free maturity. Here, the sum assured of the life insurance policy and the premium amount is required to be in a particular ratio. Let’s take a look at the different conditions of taxability of life insurance maturity amount of LIC.
Below are the conditions under which the maturity amount of LIC insurance policies are taxable
2. If the nominee of the policy dies before the insured due to any already existing disability
1. In a keyman insurance policy, an employer gets the insurance of their employees done and also receives the claim benefit
3. The maturity sum from the LIC policy is taxable if the life insurance policy was purchased in the name of a person who was disabled.
4. If the policy is in the name of a person suffering from a particular disease that is mentioned under section 80DDB, the maturity amount received from the policy is taxable
5.Your maturity amount is taxable if you spend 20% more in annual insurance premiums than the Sum Assured for a policy purchased on or after April 1, 2003.
6. Your maturity benefit is taxable if you spend 10% or more in premiums in a year compared to the Sum Assured for an insurance purchased on or after 1 April 2012
Apart from the conditions mentioned above, the maturity amount in the rest of the conditions come under the category of entirely tax-free.
2. Likewise, if the premium paid is within 15% of the sum assured for a life insurance policy bought for a disabled individual on or after April 1, 2003, the maturity benefit is tax-free
1. If you pay a premium which is within 10% of the sum assured under a life insurance policy bought on or after April 1, 2012, you can enjoy full exemption of tax from the maturity amount.
3. Also, if the premium paid is within 20% of the sum assured for policies purchased on or after April 1, 2003, the maturity amount is tax-free
LIC Policy
LIC Tech Term Plan
Term of Policy
LIC Jeevan Amar
LIC Jeevan Umang
LIC New Jeevan Anand
Sum Assured
10 to 40 years
10 to 40 years
100 years minus the entry age
15 to 35 years
INR 50 lakh no limit
INR 25 lakh no limit
INR 2 lakh no limit
INR 1 lakh no limit