Term insurance premiums qualify for tax deductions, and death benefits are tax-free — making term insurance one of the most tax-efficient financial products available to Indian taxpayers.
Section 80C — Premium deduction
Premiums paid for a life insurance policy (including term insurance) are deductible under Section 80C of the Income Tax Act, up to a maximum of ₹1.5 lakh per year. This is under the old tax regime.
| Condition | Deduction Limit |
|---|---|
| Policy issued after April 2012 | Premium up to 10% of sum assured is deductible |
| Policy for disabled person (Sec 80U) | Premium up to 15% of sum assured |
| Overall 80C limit | ₹1.5 lakh (combined with PF, ELSS, etc.) |
Section 10(10D) — Tax-free death benefit
The death benefit (sum assured) received by your nominee is completely tax-free under Section 10(10D). There is no upper limit on this tax exemption for death claims.
New Tax Regime Note
Under the New Tax Regime (applicable from FY 2023–24 onwards as default), Section 80C deductions are NOT available. However, the death benefit under 10(10D) remains tax-free regardless of which regime you choose.
GST on term insurance premiums
Term insurance premiums attract 18% GST. This is added to your premium and is not deductible under 80C.
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