Tax saving is an important aspect of financial planning. It can be hard to part ways with your hard-earned income that you could use to meet your regular expenses. While paying the taxes is your responsibility, you can be a prudent financial planner and save your annual tax outgo by making smart investment decisions.
The government of India offers several tax benefits under different sections of the Indian Income Tax Act to encourage people to save and invest in different schemes. One such popular tax-saving section is Section 80C. Under this section, you can enjoy tax benefits up to Rs. 1.5 lakhs in a financial year.
Some of the eligible instruments that qualify for Section 80C tax benefits include
- Life insurance premium
- Repayment of the home loan principal amount
- Contributions to NPS (National Pension System) account and ULIP (Unit Linked Insurance Plan)
- PPF (Public Provident Fund)
- Assured Savings Plan
NOTE – the tax savings of INR 1.5 lakhs under Section 80C of the IT Act are inclusive of all the instruments mentioned above and not individually.
So, if you have invested in the Assured Savings Plan offered by Kotak Life Insurance, you can be assured of getting tax benefits on your investment under Section 80C of the IT Act.
What is an Assured Savings Plan?
The Assured Savings Plan is a non-participating endowment assurance plan that allows you to accumulate wealth for your future goals while offering financial protection to your family.
Let us understand the working of an assured saving plan with an example
Miss. Kaveri Shetty, a 27-year-old salaried employee, purchases the Assured Savings Plan. She pays an annual premium of Rs. 1 lakh and chooses the premium payment term of 10 years for a policy tenure of 15 years. Once the premium payment term is over, Miss Shetty enjoys the policy benefits and gets coverage until maturity.
After the policy matures, Miss Shetty is eligible to receive the guaranteed maturity benefit, the accrued guaranteed yearly additions and the guaranteed loyalty addition. In the event of Miss. Shetty’s demise before the end of policy term, the insurer will pay the above amount to the appointed nominee.
Features and benefits of assured savings plan
If you outlive the policy period, you get guaranteed maturity benefits, including the basic sum assured, accrued guaranteed yearly additions, and guaranteed loyalty addition.
Another significant feature of an assured savings plan that makes it an attractive investment proposition for all is that it offers guaranteed yearly additions, payable upon maturity or demise, whichever happens earlier. The annual additions are added to the maturity payment every time you pay the premium.
Apart from the basic life protection guaranteed under the assured savings plan, you can enhance the policy scope and get additional protection by purchasing riders or add-ons. Some of the riders you can buy with an assured savings plan include accidental death benefit rider, permanent disability benefit rider and life guardian benefit.
Remember, you can voluntarily purchase these riders by paying an additional premium, which would increase your overall insurance cost. So, assess your needs carefully and choose suitable riders accordingly.
Thus, investing in an assured savings plan is a great way to reduce your annual tax liability while getting insurance protection and building wealth for your long-term goals.