Does HDFC Term Insurance Come Under Section 80C or 80D?

Section 80C – Tax Benefits on HDFC Term Insurance Premiums

HDFC term insurance comes under Section 80C of the Income Tax Act. This section allows you to claim deductions on your premiums for life insurance policies, including term insurance.

• Deduction Limit: Under Section 80C, you can claim up to ₹1.5 lakh per financial year for premiums paid towards HDFC term insurance (or any life insurance).

• Conditions: To avail of this benefit, the annual premium should not exceed 10% of the sum assured. This ensures your term insurance is primarily for protection and not just for tax-saving purposes.

Section 80D – Tax Benefits on HDFC Term Health Riders

Section 80D provides tax benefits on health insurance premiums, such as critical illness riders in term policies. It only applies to HDFC term insurance when term insurance covers health riders like critical illness or hospicare benefits. However, if your HDFC policy includes an additional health rider (such as critical illness or hospital cash), the premiums paid for that rider may qualify for tax benefits under Section 80D.

• Health Riders: If you’ve opted for health-related add-ons with your HDFC life insurance plan, part of the premium for that rider can be claimed under Section 80D.

• Deduction Limit: Under Section 80D, you can claim a deduction of up to ₹25,000 for yourself, spouse, and dependent children. This limit increases to ₹50,000 if the life assured is a senior citizen.

Section 10(10D) – HDFC Term Insurance Death Benefit Payout

Section 10(10D) provides tax exemption on the death benefit received from your term insurance policy. In the case of HDFC term insurance, the death benefit received by the nominee is completely tax-free.

• Tax-Free Payout: The death benefit received is exempt from tax under Section 10(10D), provided the premium paid does not exceed 10% of the sum assured.

• Maturity Proceeds: The maturity benefits received under section 10(10D) of the Income Tax Act, 1961, depend on various factors like the date of the policy purchase, the average premiums paid for the policies, and the tax regime selected for the year. You should always check with your insurance advisor or financial expert to get the most out of the maturity benefits.

What is the Difference Between Section 80C and 80D?

Understanding the difference between Section 80C and Section 80D is important to plan your tax savings efficiently.

• Section 80C: Focuses on investments and insurance that provide financial security to your family in case of unfortunate events (like life insurance, PPF, ELSS). Term insurance premiums fall under this section.

• Section 80D: This is specifically for medical and health-related expenses, covering premiums for health insurance policies and medical riders in term plans. It does not cover the basic life cover of term insurance.

• Section 10(10D): Ensures that the term insurance tax benefits paid on the policyholder's death are completely tax-free for the nominees.

Riders in HDFC Term Insurance and Their Tax Benefits

HDFC term insurance policies offer various riders that can enhance your coverage. Some of these riders may also provide additional tax benefits:

• Critical Illness Rider: Provides a lump sum payment if you’re diagnosed with critical illnesses like cancer, heart disease, etc. The premium for this rider may be claimed under Section 80D.

• Hospicare Benefit Rider: It offers an additional payout under section 80D for each day the life assured spends hospitalised in the general ward or the ICU.

• Accidental Death Benefit Rider: Offers an additional payout in case of accidental death. Premiums for this rider are not eligible for tax benefits under Section 80D but can still fall under Section 80C.

• Waiver of Premium Rider: Waives future premiums in case of disability or critical illness, ensuring policy continuation without financial burden. Premiums paid for this rider can be claimed under Section 80C.

How to Maximize Tax Benefits with HDFC Term Insurance?

To make the most of the tax-saving opportunities with HDFC term insurance, consider the following tips:

• Combine Section 80C and 80D: If your term plan includes health-related riders, you can claim tax deductions under Section 80C and Section 80D, maximizing your savings.

• Review Your Policy Regularly: Ensure you know the premium distribution between life cover and health riders to correctly claim deductions.

• Stay on top of the Latest Tax News: You should always keep updated on the latest tax news related to your HDFC term insurance and ensure that the policy can provide maximum benefits.

Final Thoughts!

HDFC Life Term Insurance helps you save taxes in three ways: under Section 80C, you can claim up to ₹1.5 lakh on premiums; Section 80D provides additional deductions on health riders like critical illness (up to ₹25,000 or ₹50,000 for senior citizens); and Section 10(10D) ensures the death benefit your nominee receives is tax-free. This way, you protect your family and maximize your tax savings.

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