Income Tax Saving: If you are taking a life insurance policy just to save tax, then it can be a losing deal...

If you want to secure the financial future of your family, then a life insurance policy can be one of the best options for that. But, many times people take a policy (Life Insurance Tax Benefits) just to save tax.

Those taking this type of policy do not even do much investigation. They blindly believe whatever their agent tells them. But, you should not take the policy in a hurry to save tax.

What is the connection between insurance and tax?
An annual exemption of Rs 1.5 lakh is available on the premium of a life insurance policy under Section 80C of Income Tax. Insurance agents show this greed while selling policies and trap many people with huge premiums.

Should one take insurance to save tax?
If your aim is only to save tax (Income Tax 2024), then you should look at other options other than an insurance policy. There are many such schemes of the government, by investing in which you can not only save a good amount of tax but also get excellent returns.

Whereas, if we talk about insurance policy, it costs more. This also affects your returns. Many times the returns come down to just 4 to 5 percent.

Why should one take an insurance policy?
The whole purpose of an insurance policy should be to cover your risks. Such as compensation for physical and financial losses caused by accidents. This secures the financial future of you and your family. Life insurance should not be seen as a tax-saving option.

One should be more cautious during January-March. Insurance companies put more pressure on their agents to sell policies from January to March because they have to meet the target. During this time, taxpayers also look for options to save tax. In such a situation, the agents sell the policy at a huge premium under the pretext of saving more tax.

If you want to get more returns then invest your money here
Many government savings schemes give much better returns than insurance policies. In these, tax exemption is available under 80C. Now like 8.2 percent return is being given on the Sukanya Samriddhi Yojana and a 7.1 percent return on the Public Provident Fund (PPF).

Tax exemption of Rs 1.5 lakh is also available on mutual fund schemes like Equity Linked Saving Scheme (ELSS). Apart from this, returns can also be more than 10 percent.

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