• Blog|Income Tax|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 18 January, 2024
It is already February 2018. The end of the Financial Year 2017-2018 is around the corner. So, have you paid your taxes? If not, start working and be the early bird. The earlier you clear off your taxes, the more savings you make. 
Moreover, if you are first, then certain instruments can help in saving those hard-earned bucks. Invest in them and you will witness tax saving for A.Y. 2018-2019. Read on to find out the best tax saving instrument for you in this financial year.

1. Life Insurance:

Life insurance is generally a contract between a policy holder and the insurer. The insurer assures the insured to pay a sum of money (or the benefit) after a certain period or on the death of the person. The person must pay a premium in exchange either on a regular basis or at a time. The contract may also have other points such as critical illness or terminal illness when the amount would be paid to the policyholder.
For a life insurance application, certain credentials about the policyholder need to be considered. These include:
• Personal medical history
• Family medical history
• Driving record
Body Mass Index or BMI of the policyholder is considered
This helps the insurance company to understand the health condition of the person and determine his/ her premium amount.

2. Term Insurance – Pure Life Cover:

A term insurance is much like a life insurance policy that offers a death benefit after a fixed period or term. The premiums are generally flat, ranging from 5 years to a maximum period of 30 years. After the end of the term policy, the insurance does not provide the benefits. A common feature of term insurance is that no cash accumulation helps in keeping the costs low relatively. If you are taking the cover of term insurance, make sure to use the term insurance calculator to calculate your premiums and increase your cover benefits. Term insurance will guard you against any unforeseen event and prepare you to face them without tension. It is perhaps the easiest way to secure the future of your near and dear ones.

3. Endowment Plans – Life Cover with a Maturity Value:

You can use an insurance premium calculator to find the premiums for accumulating your savings. This provides protection to your family by guarding against critical illnesses. In the event of survival of the life assured, the maturity benefit will be the following:
• Accrued simple reversionary bonuses
• Sum assured on maturity 
• Term bonus (if any)
In case of death, the nominee will receive the assured amount on death along with accrued Simple Reversionary Bonuses and Terminal Bonus.
For investing in any life insurance plan, you can ensure a tax deduction of up to Rs. 1.5 lakh under section 80C.

4. Health Insurance:

This kind of insurance helps the policyholders to combat the unexpected medical or surgical expenses. The insurer typically reimburses the expenditure for a accident, illness or injury case. In some cases, the insurer makes payments directly in favour of the insured. A person who wants to invest in health insurance plans has got an estimation done for the overall health risk at first. Thereafter, the insurer can build up a regular finance structure for the payment of premiums either on a monthly or payroll tax basis. Health insurance can be availed for one person or a group, such as family, employees of a company. Health insurance premium allows you a deduction of up to Rs. 25,000, when bought for self, spouse and kids and an additional Rs. 30,000 if you buy a health policy for your parents too.

5. Wealth Plans:

The wealth plans help you to secure your future by managing your wealth. Specifically, unit-linked wealth and savings plan allows you to develop a financial blueprint for every stage of your life. With its help, your loved ones will be able to enjoy financial security.
Provided the policy is not discontinued, on the survival of the insured till the end of the policy term, the insured would receive a total refund. In the event of the death of the assured, the nominee or the beneficiary will receive the benefits.
To sum up, an insurance cover helps you to stay protected from the unexpected events and losses. Experts find it to be a smart way to save your taxes and manage wealth. Here, it is important to note that all tax savings are subject to the provisions of the Income Tax Act, 1961 and can undergo amendments from time to time. So, it is better to consult your case with a tax expert for proper selection of plans.

Author Bio: This article is written by Varsha Channa, Finance Blogger. She grew up in Delhi, India and graduated from the University of Delhi. She has been a keen Finance blogger from 5 years. She likes to read and learn about Finance through various ways

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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