Kotak Life
Close

Buy a Life Insurance Plan in a few clicks

Close

Now you can buy life insurance plan online.

Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

Do Beneficiaries Pay Taxes on Life Insurance?

Do Beneficiaries Pay Taxes on Life Insurance?
  • 30th Aug 2019 |
  • 4,931

When you are buying online term insurance plan, you are investing money to secure the future of your family. A life insurance plan pays a lump sum to the nominee of a policyholder in case the insured passes away before the plan’s maturity. When investing in such a policy, you surely want your loved ones to receive as much financial security as possible. This is why a life insurance policy is the best investment tool for you.

If you have been wondering that ‘‘do beneficiaries pay taxes on life insurance’’ then you will be happy to know the Income Tax Act, 1961 allows tax benefits on the money received from a life insurance policy.

Who are the beneficiaries in case of life insurance?

The life insurance benefit is paid only when the policyholder passes away before the tenure of the policy is over. Hence, the money cannot be paid to the policyholder. This is why, when buying a life insurance plan, the insured has to provide the name of a nominee to the insurance company. This nominee receives the benefits once a claim is made.

You can choose your loved ones as the beneficiaries or a court can assign one for the purpose.

Do life insurance beneficiaries have to pay taxes?

It is quite common to ask, “Do beneficiaries have to pay taxes” by anyone who is buying a term life insurance plan. The term plan offers some amazing tax benefits under the Income Tax Act, 1961. There are multiple tax deductions to help reduce the tax liability of the beneficiaries. The tax benefits are offered under Sections 80C and Section 10(10D).

1. Benefit under Section 80C

Under Section 80C of the Income Tax Act, 1961 you can get a tax deduction on the money you pay as premium towards your insurance policy. The tax benefit limit is INR 1.5 lakh. The benefits can be enjoyed by individuals and Hindu Undivided Family (HUF) members.

If the premium value is over 10% of the sum assured then the maximum limit of the tax benefit will be 10% of the sum assured. This has been applicable since 1st April 2012. The maximum limit before that was 20% of the sum assured.

2. Benefit under Section 10(10D)

Apart from the tax deduction on the premium, the tax benefits can be availed on the money received as the death benefit under Section 10 (10D). As per this section, the nominee of the policyholder can receive the entire sum assured without having to pay any taxes on them. There is no maximum limit to the tax exemption under Section 10(10D).

When buying online term insurance, you must spend some time reading the terms and conditions mentioned in the policy document carefully to learn about the tax deductions. Understanding the benefits more closely can help you set your financial goals more effectively.

Buy Term Insurance Online

Read Here for More Related Articles:

Kotak e-Term Plan

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Different Types of Protection Plans

Can I Extend the Tenure of My Term Insurance Plan?

Tax Benefits of Term Insurance in India

Insuring yourself against Ill Health with a Critical Illness Rider

Term Insurance Basics You Should Know

4 Things To Expect From Your Term Insurance Plan in India

How Not To Get Your Term Insurance Claim Rejected

How To Choose the Right Term Insurance Plan?

Why Buy Term Insurance Plan With a High Cover?

Why Should You Not Take A Term Plan Without Medical Test in India?

Insuring Protection Against Death With Death Insurance Rider

Planning For Son or Daughter's Wedding

Term Insurance Calculator - Everythng You Need To Know

Does Your Term Insurance Plan Cover Death Due to COVID-19?

Can Senior Citizens Avail Term Insurance?

Why 1 Cr Term Plan Is Necessary For Family?

How to Surrender Term Life Insurance When you have No Liabilities

Why does every working woman need life insurance?

Online vs Offline Term Insurance: Which Is The Better Option To Buy

Ensure Protection Against Death, Disease & Disability With Life Insurance

6 Types of Death not covered in Term Insurance Plan

What is Critical Illness Policy

How To Calculate The Amount Of Term Life Insurance You Need?

Understanding Term Insurance Riders

Is Group Term Life Insurance Provided By Employer Sufficient?

What Should You opt for - Limited or Premium Pay?

Can Term Insurance Plans Be Purchased As A Gift?

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

Steps on How to Buy Term Insurance Online

10-Year Term Life Insurance Policy - Explained in Detail

Advantages of Buying Term Insurance in Your 50s

Can I Get Term Insurance on Behalf of My Spouse?

Should You Have Multiple Term Life Insurance Policies?

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

Why Term Plan Should Be The First Step To Securing Your Future?

Which Death Type Does Your Term Plan Not Cover?

Eligibility Criteria for Buying Term Insurance in India

Why Should You Add a Rider to a Term Insurance Plan?

All About Term Insurance Inbuilt Coverage

Key Differences Between Term Insurance, ULIPs, And Health Insurance

Tips to Choose the Right Term Period for Term Insurance Plan

Cost of Term Insurance Likely to Increase Soon

8 Things To Do After Buying Term Insurance

Why Should New Parents Buy Term Life Insurance?

5 Reasons to Buy Term Insurance When You are in Your 30s

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

What Types of Deaths Are Covered in a Term Insurance Plan?

Term Life Insurance Plan for Smokers vs Non-Smokers

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

Choosing Riders for Insurance Plans

Endowment Plans vs Term Plans: Understanding the difference

8 Benefits of Term Insurance You Should Know

4 Methods to Calculate How Much Term Insurance You Need

Why should single women purchase term life insurance?

4 Reasons Why You Need Critical Illness Cover

Why is it important to buy term insurance plan?

Why Term Insurance Is Important in times of COVID-19?

What Is the Correct Age to Buy Term Insurance?

Protection for your family

What Should Be The Duration Of Your Term Plan in India?

Should Youngsters, Working Couples Buy Term Insurance Plans?

Should You Buy a Term Plan After 40?

Why Premium Amount for Term Insurance is So Low?

What All Documents Required For Term Insurance In India?

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

While Buying Term Insurance Compare Features, Not Just Premiums

How to Compare Term Insurance Online

How Much Cover Should I Take In A Term Plan?

How Does A Term Life Insurance Work in India?

Everything About Claim Settlement Ratio for Term Insurance

How Much Term Life Insurance Cover Do I Need in India?

Insuring Against Accidents with an Accidental Death Insurance Rider

Make Your Online Term Plan Your Family's Monthly Pay Cheque

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

Do I Need to Give a Medical Test for Term Insurance in India?

5 Benefits of Early Retirement Planning

Advantages & Disadvantages of Term Insurance in India

Is ₹1 Crore Term Insurance Good Enough Cover?

What Are the Best Term Insurance Plans for Planning Retirement?

Term Plans are Definitely Cheaper than You Think!

Do Beneficiaries Pay Taxes on Term Insurance?

Does Term Insurance Cover Accidental Death?

Insurance Policy for Housewife In India

How Does Term Life Insurance Work? Learn the Benefits

Calculating Term Insurance Premium

Top 3 Reasons Why You Should Buy A Term Plan Now

Is term Insurance Needed for People With No Dependents?

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

8 Factors to consider before choosing a Critical Illness Insurance

Term Insurance Age Limit – Term Plan for All Age Groups

Can I Make Changes to My Term Insurance Policy Post Purchase?

Planning For Children's Future

Term Insurance Plans and Policies for Smokers

Gift Your Father A Term Insurance Plan This Father's Day

Term Insurance – Why You Must Include In Your Financial Planning?

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

How To Choose the Right Sum Assured Under a Term Plan?

5 Things To Consider While Buying Term Insurance Plan

Can You Increase Your Term Insurance Cover?

Why Married People Should Buy Term Insurance Under MWP Act?

Why Should You Buy Term Insurance in 2022?

Is Life Insurance Investment Worthy Enough

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

Know How to Invest at Every Age for Larger Returns

Different Types of Premium in Term Insurance

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

Insuring Against Disability With Disability Insurance Rider

Best Investment Plans for Children - Secure Your Child's Future

What is Term Insurance - A Complete Guide

What is Insurance Premium - A Detailed Guide

What Is a Renewable Term Insurance Policy?

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

5 Term Insurance Benefits for Single Women

How to Buy 1 Crore Life Insurance Policy Without Medical Test

Term Insurance with Critical Illness

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

Reasons You Need Term Insurance Plan as a Self-Employed Person

Is Term Life Insurance Plan an Investment or Expense?

All you need to Know about Term Insurance Plans for Housewives

How Much Term Insurance Do I Need

How to Identify Term Insurance According to Your Needs?

Make Your Online Term Plan Your Familys Monthly Payout

6 Reasons That Make Term Insurance a Must Buy

Is a Term Insurance Policy Portable?

Do You Need Term Insurance Cover After Retirement?

How to Ensure That Your Term Insurance Claims Are Never Rejected?

Busting Myths and Facts About Term Insurance Policies

Importance of Term Insurance at Every Stage of Your Life

How To Change The Nominee in Term Insurance?

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

What Happens if you Hide Facts in your Term Insurance?

Term Insurance: Smokers vs Non-Smokers

What are incremental term insurance plans?

Why Buy Term Insurance Even at Rising Rates?

Can I Buy Term Insurance for a COVID-19 Patient?

What is a short term insurance policy?

Increasing Term Insurance and Riders

Individual Life Insurance vs. Group Term Life Insurance

Buying A Term Insurance Plan? Take These Factors into Account

Why Term Insurance Is Better Than ULIP?

Is It Good To Buy A Term Insurance Plan In 2022?

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

9 Ways to Help Family Members in Financial Trouble

What are the Documents Required for Term Insurance Plan?

Term Plan with Spouse Cover

9 Most Frequently Asked Questions on Term Insurance

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

What Are Insurance Riders and How to Choose Them in a Term Plan?

Term Insurance With Riders In India

Term Insurance: What Happens When You Don’t Pay Your Premiums?

Comparing Term Plans – What Should You Look Out For

Is There Any Tax Benefit on Term Insurance?

Difference between Term Insurance and Life Insurance