Making resolves to make better financial decisions is arguably at the top of the list when it comes to starting a new year. Tax advantages are an important part of financial planning because they are a wonderful way to start saving money.
Most people don’t think about tax planning until the deadline is right in front of them. However, it is always advisable to plan so that your financial future can be methodically planned throughout the year.
It’s critical to invest in solutions that not only provide a strong investment portfolio but also provide greater financial security. This is why investment-cumulative insurance policies are becoming a popular investment alternative. They not only provide larger returns but also help save tax in the current market.
Furthermore, when the third COVID wave gains traction, the insurance component in these products has the potential to give additional financial stability to not just the investor, but also their dependents.
Let’s take a closer look at the tax-saving investment possibilities available to you.
Unit-Linked Insurance Plan (ULIP) is a type of insurance that is (ULIP)
The tax-free income provided by ULIPs is one of the features that attract investors. Because of their transparency and lower prices, the new-age or 4th generation ULIPs are particularly popular. These plans have a policy term ranging from 5 to 30 years, and policyholders can choose to withdraw after 5 years or at maturity, and walk away with a tax-free fund value.
They also provide more flexibility by allowing users to effortlessly move funds between loan and equity depending on their needs. These plans can yield returns of up to 12-15 percent, and they also allow policyholders to diversify their investments.
Guaranteed return plans
The financial stability that guaranteed return plans provide to an investor’s hard-earned assets is its most well-known feature. They allow policyholders to invest for longer periods without having to worry about market fluctuations affecting their returns. These goods, on the other hand, can help you save money on taxes.
Life insurance coverage equal to ten times the annual payment is included in guaranteed return plans. Furthermore, under Section 10 of the Internal Revenue Code, these premiums, along with the maturity amount, are eligible for a tax refund (10D).
Term insurance is yet another popular way to save money on taxes while also securing the future of your loved ones during these trying times. The premiums paid on the coverage are tax-deductible under Sections 80C and 10(10) D of the Internal Revenue Code of 1961.
The maximum amount is Rs 1.5 lakh, and you can save tax on policies bought for parents, spouses, or children in addition to yourself. In addition, in the event of the policyholder’s untimely death, the sum promised given to the dependents is tax-free.
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