Insurance money and tax

POSTED BY TheZionView ON September 26, 2010 10:51 pm COMMENTS (3)

People say to calculate Insurance based on your goals and needs. Let me assume my family will need 50lakh in my absence to cover the expenses and meet other goals.

Now if i die after 5 years.Insurance company gives 50lakh to my family ,this amount is taxable right? if yes the tax above 10 lakh is 30%,which will take away 12lakh from my insurance money from my family. Or is it tax free? or should i include tax as a factor along with inflation when considering insurance amount?

3 replies on this article “Insurance money and tax”

  1. The death claim amount of insurance policy is tax-free in the hands of nominee. So, don’t worry about taxation point of view.

    If you’ve already term insurance policy, & as taken a new policy from another company, there is no need to inform the previous company. Just stop paying the premium. You need to tell the company if you’re paying the premium via ECS.

    Just one more suggestion. First get your iProtect policy bond; go through it; clear all your doubts. If everything seems to be OK, then stop paying premium of your existing policy.

    Hope it will help you.

  2. prabeesh says:

    one more thing,, if i have to stop a policy and go for another is there a process i should follow or i just stop the premium?

    say i have LIC policy 50Lakh and iprotect comes in with cheaper permium ,,now i wanna shift to iprotect ..i will just stop lic premium and start iprotect?

  3. JayaprakashReddy says:

    Term insurance policy maturity proceeds are exempted from tax at the moment. Even new direct tax code is not pulling term insurance into EET policy but other insurance policies are pulled into EET.

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