Save Tax from LIC Policies

LIC Policy can be taken in the name of an individual.  An Individual can claim exemption on LIC Premium paid on her/his life, his/her spouse, his/her children including adult children and married daughter(s).

Under Income Tax (IT) act section 80C,  an amount of Rs.1 lakh is allowed as exemption on the total income in respect of investments made in LIC premium or other specified investments like NSC (Upto 1 lakh), PPF (Upto Rs.70,000) etc. One can invest maximum of 1 lakh under pension plans also which is under overall limit of Rs.1 lakh u/s 80C.

The total amount of deduction under all the relevant sections such as section 80C, section 80CCC and section 80CCD should not exceed Rs.1 Lakh limit.

Under Section 80DD a deduction upto 1 lakh p.a is allowed from gross total income, when a contribution or deposit is made with the LIC for the maintenance of a handicaped dependent.

Any sum received under LIC policy including maturity bonus etc., is non-taxable (except Keyman Insurance, Jeevan Aadhar, Jeevan Akshay, New Jeevan Dhara, New Jeevan Akshay & Dhanaraksha Mutual Fund). Please check with your LIC Agent/ Income tax consultant for more details as Income tax laws are subject to change.

Premiums paid in excess of 20% of the Sum Assured will not be eligible for Tax free returns under section 10(10D) except in case of death.

Deduction under section 80D
Medical Premium paid for a Health Insurance policy is deductible to the extent of Rs. 15000 for an assessee and/or his family members’ policy/s. A separate exemption to the extent of Rs. 15,000 for premiums paid for an  assessee’s parents is also available. If any one or both of the parents are Senior citizens, then an enhanced exemption limit of Rs. 20,000 is available.
Section 80D also covers payment of premium exclusively for Critical Illness Rider.