Insurance Policies are the most popular way to secure financial lives and save taxes

This is a dual edged benefit – one is save tax and second gives you financial cushion, in the case of contingency. The total amount you pay towards the life insurance premium for yourself, spouse, or children whether married or not, is allowed as tax benefit deduction under 80C. However, there are various strings attached to it.

Amount you can invest: No limit. But Tax benefit under section 80C will be restricted to maximum Rs.1.5 lakhs.

Returns: Depends upon the type of policy you are taking. As per Quora it gives you return around 5% p.a. But, some policies like ULIP can go far beyond this data.

Lock in period: Ideally it differs policy to policy. Normally it ranges from 10-30 Years. Surrender value differs as the time period for which policy has been in force differs.

Tax benefits: LIC also comes under EEE category. Amount Investment in form of premiums is exempt u/s 80C. Also, the surrender value is tax free if premium paid is 10% of SUM Assured.

Expert’s Advice: Only investment option which secures your complete family after your demise. But, if you look for an option which yields good return, LIC is not for you. It is highly used gateway to tax saving in India, but, excessive employment of funds in LIC may not be a good decision.

So, now that you are aware about the lock-in’s, risk involved and the return you can earn on each of the tax saving avenues. It’s time of the year for you to choose the right one and start investing before it’s too late. 

Click to know more