Money back products in life insurance give tax sops. Incentives are a big draw for investors. A key reason for buying insurance is tax saving. In India, a deduction is provided to an individual for the sum invested in insurance policies. The amount invested in life insurance is eligible for deduction from taxable income under Section 80C of the Income Tax Act. The maturity benefit from a life insurance company too enjoys tax benefits under section 10(10-D).
In life insurance space, money back plans are the most popular ones among traditional investors. This is because of the following benefits:
n They provide insurance and investment with a low risk element
n Under these plans, you get fixed per cent of sum assured at regular intervals, say after every three to five years. The balance sum payable is paid with bonus at the time of death or maturity benefit. Death benefit doesn’t include money already paid as survival benefits during the tenure of the plan
n Tax benefits