Do Beneficiaries have to Pay Taxes on Life Insurance in India? – Kotak Life
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

Do Beneficiaries Pay Taxes on Life Insurance?
  • 30th Aug 2019 |
  • 7,133

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:

Download Brochure

Features

  • Increasing Life Cover*
  • Guaranteed^ Maturity Benefits
  • Enhanced Protection Through Riders
  • Tax Benefits
  • Dual Benefits: Guaranteed^Maturity + Death benefits

Ref. No. KLI/22-23/E-BB/999

T&C

Browse our library of resources

Download Brochure

Features

  • Enhanced Protection Through Riders
  • Life Cover
  • Tax Savings
  • Multiple Premium Payment Terms
  • Guaranteed @ Loyalty Addion
  • Accrued Guaranteed @ Additions

Ref. No. KLI/22-23/E-BB/490

T&C

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Received an Income Tax Notice? Your Guide to Understanding Intimations under Section 143 (1)

8 Things to Help You Select a Savings Investment plan

Investment Proofs You Need Submit To Lower TDS Cut From Your Salary

How to File Income Tax Return - Everything You Need to Know

Who Should Invest In Savings Plan

5 Unusual Investments You Didn't Know for Saving Taxes in India

Saving Income tax in 2017 - 18

Types of Income Tax Return (ITR) Forms

Tax Structure in India

Tax Deductions You MUST Know

Have You Considered Term Insurance a Part of Your Tax Planning?

Impact of GST on Life Insurance in India

Understanding Tax Exemptions in ULIP (Old and New)

Income Tax Benefits for Doctors

How to File Form 16 for Salaried Employees?

Tax Planning and Tax Benefits of Life Insurance

How to e-Verify your Income Tax Return

How to Get Form 16?

Insurance and Endowment: Everything You Need to Know!

Income Tax Deduction Under Section 80CCC In India

Tax Saving for Self Employed in India

How to Check Income Tax Refund Status Online in India

Section 10 (10d) of Income Tax Act, 1961 on Payouts of Life Insurance Policy

Financial Benefits and Government Schemes Every Woman in India Should Know

Tax Saving Tips: Best Ways to Save Income Tax for 2021

How to File Form 10E for Tax Relief on Salary Arrears?

Budget 2019: Impact on the Common Man in India

All about TDS on Salary under Section 192 – Kotak Life

What is TDS Slab?

What is Section 80C Deduction Limit?

Tax Saving Options other than Section 80C

What is a savings plan?

How can I get Form 16B from traces?

What is the TDS Rate on Salary?

What is Form 26AS - All You Need To Know

Everything You Need to Know About Tax Benefits of National Pension Scheme (NPS)

How to save tax for salaried person?

Income Tax Deductions for Disabled Person Under Section 80U

How to View 26AS and Download Form 26AS Online?

How to e file ITR on Income Tax Government Portal

Section 16 of the Income Tax Act (ITA), 1961

What is ITR & How to File Income Tax Return?

Income-Tax Liability- The Difference Between Gross Income & Total Income in Calculating Income Tax

What Is Advance Tax and How Is It Calculated?

What is Section 80CCC of the Income Tax Act 1961

Why Tax Planning Should Be an All-year Round Activity

Section 80D - Medical and Health Insurance Tax Benefits Under Section 80D

What is Form 16B?

Tax Benefits of ULIP Plans Available for NRIs

Sub-sections Under Section 80C of the Income Tax Act, 1961

Guide for Tax Calculation on your Salary

What is TDS Refund Process?

All about TDS Payment Online & Due Dates

How to Check Income Tax Refund Status Online in India

What To Do If Your TDS Is Not Deposited With The Government?

What is Tax Deduction at Source (TDS)?

TDS Due Dates of FY 2020-21 For Return Filing

How to File ITR Online

Pradhan Mantri Suraksha Bima Yojana

Income Tax Filing For NRI in India

What is Section 10D of the Income Tax Act?

Tax Benefit of Investing in Term Plan

How to Save Income Tax with Insurance

What is the Last ITR Filing Date and Penalty for Late Filing of ITR?

5 Popular Tax-Saving Schemes in India

What are the Different Types of Taxes in India?

LTC Cash Voucher Scheme October 2020 – Everything You Need to Know

Can You Get Term Insurance Without Income Proof?

Income Tax Deductions & Exemptions under Sections 80C, 80D & 80DDB for FY 2021-22 & 2022-23

Section 80E: Tax Exemption on Interest on Education Loan

Tax-Savings Investments and Options in India

Tax Exemption and Scope of Coverage

Tax-Free Income in India

What are Deferred Savings Plans?

Interest Imposed Under Sections 234A, 234B and 234C

Types of Riders in Insurance Policy

धारा 80डी आयकर अधिनियम, 1961

Why January Is an Important Month for Saving Tax?

Tax Benefits for Startups in India

Tax Saving Options for Salaried Employees

Section 80C Deductions as per Income Tax Act, 1961

ITR-6: Guide to filing ITR-6 Form online

A Complete Guide for Filing ITR 3 Form

Home Investment Plan to Buy Dream Home

Why is Form 16 Important?

How to Pay Advance Tax Online in India

Penalty For Late Filing TDS Return

What is Tax Evasion and What Are The Penalties For Tax Evasion In India?

What are Direct Taxes? How to Avoid being Overtaxed?

What is Salary Protection Insurance and Why You Need It

Should one prefer a guaranteed savings plan over monthly income schemes?

What is the Difference between Form 16 and Form 16A?

How To Save Tax Better with 80C

Section 44AD of Income Tax Act for AY 2021-22

आयकर स्लैब 2021-2022

Save Income Tax by 31st March: Here Is a Checklist

Things to Do After Filing Income Tax Returns

What is the Percentage of Tax Deducted at Source (TDS)?

Tips to plan your savings in 2019

What Investment Options Come with Tax Incentives?

How to Save Tax on Salary Arrears?

Top 8 Tax-Saving Methods in India- Budget Planning

9 Income Tax Myths That Could Cost You Money while Filing returns

Excess TDS Deduction – Claim TDS Refund

List of Important Income Tax FAQs

ITR 2 Form – Complete Guide

Challan 280 - How to Use Challan 280 to Pay Income Tax

How To Save Tax Using Life Insurance?

सुकन्या समृद्धि योजना (SSY) के कर लाभ क्या हैं?

What is Form 16A?

Presumptive Taxation for Business and Profession

Section 80G of the Income Tax Act

How to File Income Tax Return without Form 16

A Comprehensive Guide to Understand the ITR 7 Form

When Should TDS be Deducted and Who is Liable to Deduct it?

Difference Between Guaranteed and Assured Returns

52 Weeks Savings Plan: Daily Savings Plans for a Better Tomorrow

E-Filing of Income Tax Returns in India

What is ITR 5 Form and How to File ITR 5?

All You Need to Know About Section 80C

Are Financial Planning and Tax Planning the Same Thing?

इनकम टैक्स रिटर्न कैसे फाइल करें?

धारा 80सी आयकर अधिनियम, 1961

भारत में महिलाओं के लिए सरकारी योजना

Union Budget Highlights – 1st February 2022

What is Section 80C - Explained in Detail

Problems People Face with Tax Returns after a Job Change

A Guide to Life Insurance Policy’s Tax Benefits and Taxability

आयकर रिटर्न (आईटीआर) फॉर्म के प्रकार

Income Tax Slabs and Rates in India for FY 2021-22/AY 2022-23

Investing Lump Sum Amount

How to Download Form 16?

How Much Money This Budget 2019 Can Help You Save

Tax Saving Guide for 2019-20

Difference between Section 80C, 80CCC, 80CCD & 80D

Financial Planning and Best investment options for Housewives

Income Tax Filing Using Multiple Form 16

Income Tax Deductions Under Section 80C

Income Tax Exemption for Disabled

What is HRA (House Rent Allowance) and How is HRA Exemption Calculated?

What is TDS Exemption Limit?

What is Section 80C Deduction?

How to Check Income Tax Returns Status Onine?

What is Section 195 of the Income Tax Act? TDS on Non-Residents of India

How to File Income Tax Return for First Time Tax Payers

ITR 1: Sahaj Form

How to file Form 16 online?

What is the Maximum Maturity Benefit in Assured Savings Plans?

How to Calculate returns on an assured savings plan?

Income Tax Exemption for Physically Handicapped Dependent

What is the Difference Direct Tax and Indirect Tax

How to File TDS Return?

How to View 26AS and Download Form 26AS Online

Tax Season Is Coming- Know How to Save Tax

Guaranteed Return Plans-Why is it a must for you?

प्रत्यक्ष कर और अप्रत्यक्ष कर में क्या अंतर है?