Life Insurance - Preparing for the Inevitable

A life insurance can be described as an official contract, between two individuals, i.e. the insured and an insurer, wherein the insurer promises to pay a specified beneficiary, an amount of money upon the death of the insured. The policy holder pays either regularly or a lump sum as premium to the insurer. There are three categories of life insurance, whole insurance, term insurance and universal insurance. The whole insurance includes the entire life and beyond of the insured. It also includes insurance and an investment fund. Term insurance lasts for a particular period and has no investment component. Universal insurance is a combination of term insurance with money market investments.

The life insurance policies also provide investment options along with tax benefits to the insured Under Section 80C as per the Tax Act. Products that are best suited to the need of the individual such as child plans, retirement plans, pension plans, etc are also provided. The section 80C under the Tax Act provides certain Tax Saving Schemes which help individuals obtain a tax deduction on their annual income. When a person invests up to a maximum amount of Rs 1 lakh, some of these investments are deductible from the income. Various financial service providers are providing insurance covers in India such as the SBI Life Insurance which is currently the best life insurance in the country.

Some of these tax saving schemes have been listed as below:

1. Post Office Time Deposits: These are fixed deposits in the small savings segment. The POTDs of 5 Year is only eligible for tax benefits though under this section.

2. National Savings Certificate: Requires a lump sum investment for a 6 year period presently with a return of 8.0% p.a.

3. Public Provident Fund: Every year deposits need to be made to keep the account active and extend over a 15 year period.

4. Life Insurance Premiums: A premium or a lump sum has to be paid by the insured to the insurer.

5. Equity Linked Savings Scheme: Some mutual fund schemes known as Equity Linked Savings Scheme are eligible for Deduction Under Section 80C.

Some other avenues such as Voluntary Provident Fund, Infrastructure Bonds, Pension Funds, Bank Fixed Deposits, children's education expense are declared as deductions under Sec 80C.

Life insurance is for providing a security cover to the life of an individual. It includes whole insurance, term insurance, and universal insurance. Benefits of life insurance are not only limited to insurance but also provide investment plans and tax benefits under section 80C.

ONLINE INSURANCE - AN EFFORTLESS WAY

Online Insurance is applying for insurance on the internet. It has many benefits in our life. First of all it saves time and effort.  People used to visit every bank when they were required to take insurance. Therefore, it resulted in the wastage of both time and money. But now companies have their own websites through which anyone can apply for life insurance.

Secondly there is no need of any paper or document for Online Insurance. So it is simple and easy to use. The process of negotiation is also very fast as compared to the traditional method. Moreover, individual do not get confused for any documents or process. Another benefit of Online Insurance Quotes is that it is more secure than offline insurance quotes. Since it provides the feature of online payments, which not only saves time but also provide security. Many banks have special customer care for life insurance; they provide all the required information.

One more advantage of this Insurance is that the sites provide many benefits at a cheaper rate as compared to genuine banks. They also provide the comparison with various other banks on interest rate and policies. The information is adequate and instant. Even some sites provide you the facility to change some plans according to the requirement which one do not gets normally. Therefore, you can give changes to your own policies. So, this criterion has many additional benefits such as special promotions and Tax Saving Schemes.

The form provided by these sites is easy and simple to fill and if anyone has a problem he/she can go for customer care and they give the instant information. One should fill only the relevant details. The sites also give you the updated information in the form of mails and SMS alerts.

As mentioned, online insurance provides you an easy way to save and secure the future. But you need to be watchful while going through these sites and then apply. All companies have their Insurance Broker for giving the required knowledge. The details filled by you must be correct and relevant and should match with your data. Be smart and utilize your time by applying for online insurance.

Ways to Save Tax under Section 80C

As the income of an individual increases the Income Tax paid by him also increases. But the government provides various schemes through which person can not only save tax but also he can invest his income in a useful way.  The Indian government has provided options such as ELSS (Equity linked saving schemes), health insurance and infrastructure bonds. The ELSS is aimed at providing rebate to the tax payers. There are many banks that offer health insurance and individual can invest his or her money. Besides this financial organization such as LIC, SBI and L&T cover infrastructure bonds and one can get the best benefits. All the schemes come under Section-80C.

Now what is Deduction under Section 80C? It is a law which has been introduced by the government. It comes under the Income tax department and allows certain investments and expenditure to be tax-exempted. One needs to plan properly before investing in any of the schemes. First of all the Section 80C offers savings plan such as NSC (National Savings Certificate) and PPF (Public Provident Fund). The NSC is a post office saving scheme, here one is exempted from tax by investing an amount up to 100000 per year. The rate of interest is compounded half yearly at the rate of 8%%, and there's a reinvestment every year from the last year's NCS. Government has provided tax saving plans under Section 80C which is a law under Income Tax department. The scheme provides ways a person can utilize his or her income efficiently.

Public Provident Fund investment plan is appropriate for reducing the taxes under the limit of 1 lakh. The return in this Tax Saving Schemes is compounded annually at the rate of 8.5%. Another popular tax saving under this section is FD (fixed deposits) which is a fixed amount invested for a particular duration but here the minimum duration is 5 years. A life insurance premium for an individual or his child is also included in Section-80C. But borrower should know that the premium for parents and grandparents doesn’t come under this. The latest and a lucrative scheme is Senior Citizens Savings Scheme (SCSS) 2004 where the current rate of interest is 9% per annum payable quarterly.

The Tuition fee called the amount paid towards the education of children is also included in this, but one can get a maximum exemption of 100000. Lastly there are various Health premiums provided by banks. The Section 80c has been provided only for the benefit of people. So everyone must go through the information properly about the relevant schemes before applying and can choose the best.

Benefits of Income Tax Deduction

Tax saving is essential for the people who want to save their tax. Section 80c provides the best options to save the tax by saving up to 1 lakh. These refunds allow for reduction of the tax compulsory on the salary or income of the investor. These solutions are beneficial for investors who would like to manage their wealth along with tax saving. There are several ways through person can avail tax benefits and get profit from them.

Under Section 80C, investor can save their tax in annual income. There are several options are available to save tax like Public Provident Fund, Life Insurance, Post Office Deposits, Equity Linked Savings Scheme (ELSS), Employee Provident Fund, National Savings Certificate, Senior Citizens Saving Scheme and Tax Saving Bank FDS. Investor can use any option to reduce the tax. Besides from the regular investment options in Section 80C, investors can also invest in infrastructure bonds and enjoy an additional benefit in tax under section 80CCF.

Investor can use any Tax Savings to reduce tax on income. There are several schemes are available in India are as follows:

Senior Citizens Saving Scheme: Senior citizens who have reached 60 years of age, they are eligible to invest in senior citizen saving scheme. They can get attractive offers of 9% interest rates payable on a quarterly basis. It helps the person to invest money for tax deduction under section 80C.

  

Public Provident Fund (PPF) - PPF investment plan is appropriate for reducing the taxes under the limit of 1 lakh. The borrower does not need to pay the entire tax on the maturity of this investment. Central Government started Public Provident Fund for any individual Indian citizen. The individual does not have to be salaried individual or a government employee. The earned interest and invested amount both are tax free and hence, the individual can get tax compensation in PPF investment. 

Life Insurance - The individual can get tax refund under Section 80C of Income Tax Act, by investing in the life insurance.  Several life insurance companies provide several plans and policies to their customers such as Child plans, Investment plans, savings plan and retirement plans. 

Post Office Deposits - There are some of the common post office based tools of tax benefits:

A)                PPF (Public Provident Funds)

B)                 KVP (Kisan Vikas Patra)

C)                 NSS (National Savings Scheme)

D)                Post Office Time Deposits

E)                 Post Office MIS (Monthly Income Scheme)

F)                  Post Office Recurring Deposits