1Why Indian homemakers deserve to have an independent Term Insurance Cover
A penny saved is a penny earned. With just a month left for the current financial year to end, tax planning can help you save on taxes and increase your gross income. Taxpayers across the country are looking to invest in popular tax-saving options. If you’re one of them, here’s an important update for you.
As per recent budget 2023 announcements, traditional life insurance policies above a premium of Rs 5 lacs annually will be taxable from 1st April 2023. But what does it mean for investors? What will be its impact? Let’s break it down for you.
Let’s assume you invest Rs. 12 lacs annually for 5 years. In 10 years, your corpus will increase and become Rs. 1.03 crores. Today, this entire maturity amount will be completely tax-free under section 10(10D). But if you make this same investment after 31st March 2023, you will make only Rs. 86 lac after tax deduction, if you fall in the 30% tax slab. This means you’ll be incurring a loss of Rs. 17 lac.
But wait, there’s some good news. You still have one month to buy a traditional life insurance policy and enjoy tax-free returns of up to 7.5%. A smart investor will use this opportunity to buy a life insurance plan before 31st March 2023, and lock in the benefits for future years.
What is traditional life insurance?
Traditional life insurance provides coverage to policyholders for their entire life. They are an ideal choice for individuals with a low-risk appetite. In case of the inevitable death of the policyholder, the insurance payout is made to the beneficiaries. A mix of insurance and investing, these plans are primarily used for wealth creation, offering a small cover by way of protection. Their key features include:
27 Apr, 2023