Prices Increasing soon Prices Increasing Soon

Tax Benefits and Refund Details About Term Insurance

Term Insurance is one of the best ways to cover your family against uncertainties of life. It is easy to understand, and the premiums are highly affordable. However, you might not know that you can enjoy tax benefits with a term insurance plan. Moreover, there can be certain unavoidable situations in your life where you have to surrender the policy. In that case, can you get a refund for the policy? What are the rules to get a refund? Find all information about tax benefits and refund details about term insurance in this article.

Read more
Gets ₹1 Cr. Life Cover at just
COVID-19 Covered
The Policybazaar Advantage
Dedicated claim support for family FREE
Upto 10% discount for buying online
Only certified experts will call you on 100% recorded lines
We are rated~
6.7 Crore
Registered Consumers
Insurance Partners
3.4 Crore
Policies Sold

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

By clicking on "View plans" you agree to our Privacy Policy and Terms of use

~Source - Google Review Rating available on:-

Life is Unpredictable! Protect your family’s future
Get ₹1 Crore Life cover starting from ₹384/month+
We don’t spam
Check Your Premium Now
Please wait. We Are Processing..
Get Updates on WhatsApp
The Policybazaar Advantage
Policybazaar Advantage Icon
Dedicated claim support for family FREE
Policybazaar team will help and support you at the time of claim. A personal claim handler from our team of experts will get in touch with you when your nominee applies for a claim on our website.
Policybazaar Advantage Icon
100% calls recorded to ensure no mis-selling
We will make sure you get what is promised by the advisors. We conduct regular monitoring of our calls to make sure you get the best experience.
Policybazaar Advantage Icon
Exclusive lifetime discount upto 5% for buying online
The discounts will be valid for the entire policy payment term and is not available if you choose to buy the insurance through offline agents.
Policybazaar Advantage Icon
Advisors available in your city
Our advisors are available in more than 55 cities across India and can help you at your doorstep in understanding the plans and in documentation.
Policybazaar Advantage Icon
Refund at the click of a button
In case you aren’t happy with your purchase, you can cancel your policy hassle-free at the click of a button. We will help you with the cancellation and refund of your policy.

Note: Know more about what is term insurance first before reading this article.

one crore term plan

Term Plans


Life Cover

@ Starting from ₹ 16/day+


Life Cover

@ Starting from ₹ 8/day+


Life Cover

@ Starting from ₹ 12/day+

Tax Benefits and Refund Details About Term Insurance

  1. Tax Benefits of a Term Insurance Plan

    To lower tax costs, a wide range of exemptions and deductions are offered under the various provisions of ITA (Income Tax Act). Taxpayers are allowed to invest in a range of financial instruments that can be exempted or deducted from these tax deductions. Having term insurance comes with two main term insurance benefits . The insured's nominees are financially covered, and the premiums paid by the insured are tax exempt. 

  2. Term Insurance Tax Rebates Under Section 80C of ITA

    Section 80C under the Income Tax Act is the most widely used tool to save tax by individuals. The section allows the maximum tax deduction of 1.5 Rs. for each of mentioned investments and instruments together. This includes a range of instruments, including PPF, EPF, ULIP, ELSS, and payments such as the repayment of a home loan tuition fees for children, life insurance premiums, etc. Under this Section, the cost of the term premiums made qualify for tax exemptions up to Rs.1.5 Lakhs (total of all investment and payments made under this section).

    The requirements to receive the tax benefits for term insurance under Section 80C are:

    • The annual premiums paid must not be more than 10% of the amount insured. If the premiums exceed 10 percent, deductions are allocated proportionally.
    • In the case of policies issued before 31 March 2012, the deduction will only be applicable when the annual premium payment amount is not more than 20 percent of the sum assured.
    • According to Section 80C (5), if a plan is surrendered involuntarily or canceled two years after purchasing it, the policy owner will not receive tax benefits under Section 80C on premium payments.

    Note: You can easily calculate the term plan premium by using the term insurance calculator online tool.

  3. Term Insurance Tax Rebates Under Section 80D of ITA

    This section is reserved only for health insurance plans. However, certain term plans also offer tax benefits under Section 80D. Insurance policyholders wherein health-related insurance riders (such as Critical Illness, Surgery Care, or hospital Care Rider) are selected as part of the term insurance plan are also eligible for deductions.

    Conditions for the term insurance benefit 80D are:

    • Deductions under Section 80D may be claimed for a sum not exceeding the sum of Rs.25,000.
    • If you have taken out an insurance plan for the parents, you will be eligible for an additional deduction of Rs.25,000.
    • This deduction limit can go as high as Rs.50,000 if your parents are senior citizens.
  4. Term Insurance Tax Rebates Under Section 10(10D) of ITA

    Following the provisions of Section 10(10D) in the Income Tax Act, the amount assured at the surrender or maturity of a plan or the death of the policyholder is tax-free. The bonuses that are derived from this amount are exempted per section 10(10D).

    Conditions for tax exemption under 10(10D) include:

    • Tax benefit for Term plans in section 10(10D) is valid when the premium paid is under ten percent of the sum assured. Otherwise, the sum assured needs to be at least ten times the premiums paid. 
    • If the amount paid is greater than Rs.1,00,000 and the policyholder's PAN is accessible to the insurance company, a TDS (Tax Deducted at Source) of 1% is used.

one crore term plan

Secure Your Family Future Today


Term Plan Starting @ ₹449/month+

Get an online discount of upto 10%+

Compare 40+ plans from 15 Insurers

+Standard T&C Applied

Can You Request a Refund in Term Insurance?

You can cancel your policy and claim a refund if they do not meet the criteria of your long-term plans. However, you must complete this process during the free-look duration.

Purely designed to benefit you, the free-look period aims to help you determine whether you would like to continue the policy or not. To end a term plan or health insurance policy, you must convey your decision to your insurance company. After this, the company will typically offer you some alternatives that might work for you. However, if you still do not wish to continue the policy, you can submit a cancellation form online or visit the nearest office of the insurer. 

When the cancellation form is completed and submitted to the insurer, it could take a couple of days to complete your request. Before you file the cancellation request, be sure you have all the information required below:

  • The date when you received your official policy papers.
  • The agent's contact details (if you bought insurance through an agent).
  • The reason for the cancellation of the long-term insurance plan.
  • An active bank account to receive the refund amount. 

Final Word

Before purchasing a term insurance plan, it would help if you understood what it means and the benefits it can offer. Moreover, you must assess your financial conditions and make sure the term plan you purchase will suit your lifestyle requirements. Tax benefits are one of the plus points of buying a term insurance plan. Note that once you buy it, you have anywhere between 10-15 days of free look period (depends on the insurer) to cancel the policy and get the refund. We are sure you now fully understand tax benefits and refund details about term insurance. 



Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product by an insurer or any other financial product.

The investment risk in the investment portfolio is borne by the policyholder.

Note: Check out the best term insurance plan in India and choose one that suits your requirements.

Premium By Age

Term insurance articles

  • Recent Article
  • Popular Articles
05 Jun 2024

Why Should You Consider Inflation When Buying a...

The retail inflation of India rose to 5.69% in December 2023

Read more
29 May 2024

Term Insurance for Individuals with 25K Salary

Securing your family's future is essential, especially when

Read more
28 May 2024

'Har Family Hogi Insured' Policybazaar's Vision...

Empowering Every Household: policybazaar's Commitment to

Read more
23 May 2024

Term Insurance for Individuals with a 35K Salary

Securing your financial future is essential, especially when

Read more
07 May 2024

Term Insurance for 45K Salary Individuals

In life, unpredictability looms large, and while you may

Read more
20 Aug 2014

Term Insurance for Women in India

Term insurance for women is a type of life insurance specifically designed for fulfilling women’s needs and

Read more
03 Dec 2020

What Is Saral Jeevan Bima

Saral Jeevan Bima (SJB) is a simple term insurance plan that offers financial protection for policyholder’s

Read more
13 Apr 2021

2 Crore Term Insurance Plan

2 Crore term insurance provides cover amount of 2 Crore as death benefit to your family in the event of your

Read more
07 Mar 2023

TATA AIA Smart Sampoorna Raksha Param Rakshak Plus

TATA AIA Smart Sampoorna Raksha Param Rakshak Plus is a comprehensive life insurance policy for individuals

Read more
Need Help? Request Callback
View Plans
Download the Policybazaar app
to manage all your insurance needs.