Monday, 24 March 2025

March Money Moves: Secure with life insurance now for maximum tax savings & financial security

As March unfolds, we find ourselves at the grand finale of the financial year. It’s a time filled with urgency, number crunching, and planning for what’s next. Whether you're an individual or a business owner, March demands your attention. It’s the perfect moment to assess your financial situation, make strategic moves, and ensure you're ready for the year ahead.

For working professionals, it's tax season – scrambling to submit proofs, making last-minute investments, and praying for refunds. If you run a business, you are closing accounts, chasing targets, and preparing for the next big leap. And if you are the boss, well, you are navigating the storm of appraisals, budgets, and team expectations.

With so much going on, financial planning often takes a backseat. But here’s an interesting catch. March is also your last chance to make smart money moves that can save taxes and secure your future. Simply put – ek teer do nishaane.

So, what’s the best way to do that? Lock in a life insurance policy before the financial year ends!

Most of the time we overlook this aspect, but let’s tell you why March is the perfect time to tick life insurance off your to-do list:

Helps you save on taxes
Manages your money better
Secures you and your loved ones

Voila! Enter the new financial year stress-free.

The question is what’s the hurry? Why before March 31?

Here are some key benefits that will answer your concern of why this hurry.

Maximizes deductions under Section 80C

One of the biggest incentives for purchasing life insurance before March 31 is the tax benefit under Section 80C of the Income Tax Act. Here’s how it works*:

Deduction of up to Rs. 1.5 lakhs: The premiums you pay for a life insurance policy are deductible up to Rs. 1.5 lakhs per year.
Reduces taxable income: This means your total taxable income decreases, potentially lowering your tax bracket.

Gives tax-free maturity benefits under Section 10(10D)*

Beyond just premium deductions, life insurance maturity benefits also offer tax advantages:

No tax on payouts: The maturity proceeds are tax-free under Section 10(10D), provided the sum assured is at least 10 times of the annual premium and the premium amount is below prescribed limits (INR 2.5 lakh for ULIPs and INR 5 lakh for other policies)*
Long-term wealth creation: Your investment in life insurance ensures you receive a tax-free corpus when the policy matures.

Wait. There’s more! There are additional deductions under Section 80D*

If you opt for a life insurance policy with health riders such as critical illness or hospitalization benefits, you can claim additional deductions under Section 80D:

Up to Rs. 25,000 for self & family: If you pay premiums for a health rider, you can claim tax benefits under this section.*
Extra Rs. 50,000 for senior citizen parents: If you are paying for your elderly parents' insurance, the benefits increase further.*

This sounds great right? Now let’s address the point on why before the financial year ends.

Delaying your life insurance purchase beyond March 31 means losing out on tax savings for the current financial year. Any premium paid after this date will only count for deductions in the next financial year, delaying your benefits.

This is the best time to review your financial portfolio and ensure that you are taking full advantage of the available tax deductions. Life insurance should not only be looked as a protection tool but also as a tax-saving instrument. It acts as a great balance in your investment planning along with investments in PPF, ELSS, FD etc.

It’s important to avoid last-minute rush. These investments cannot be done overnight. It’s imperative to make an informed decision – compare policies, understand benefits and choose the right coverage.

Age plays a crucial role as your premiums are far lower when you are young, and you get an opportunity to secure coverage before any health conditions arise, which could increase your premiums or could even make you ineligible.

How do you select the right policy?

With various life insurance options available, selecting the right one depends on your financial goals, risk appetite, and long-term plans. It’s important to first understand the different policy types and how they can help you save on taxes while ensuring financial security:

Term Insurance: Pure Protection with Tax Benefits*

If you are looking for an affordable yet effective way to secure your family’s future, term insurance is the way to go.

High Coverage, Low Cost: Offers substantial coverage at lower premiums, making it ideal for young earners and families.
Tax Benefits: Premiums paid qualify for deductions under Section 80C, reducing taxable income by up to Rs. 1.5 lakhs per year.
No Maturity Benefits: Unlike investment-linked plans, term insurance doesn’t offer payouts upon policy maturity, but it provides invaluable financial security for dependents in case of an untimely demise.

Endowment & Money-Back Plans: Savings + Protection

For those who prefer a mix of insurance and guaranteed savings, endowment and money-back plans offer dual benefits.

Disciplined Savings: These plans encourage regular savings while providing life cover.
Guaranteed Maturity Benefits: Upon policy maturity, you receive a lump sum, which can be used for future financial goals like your child’s education or retirement.
Tax-Free Payouts: Tax-Free Payouts: Maturity proceeds qualify for tax exemptions under Section 10(10D) provided the sum assured is at least 10 times of the annual premium and the annual premium amount is below prescribed limit of INR 5 lakh.

ULIPs (Unit-Linked Insurance Plans): Market-Linked Growth with Tax Advantages

Want to combine life insurance with wealth creation? ULIPs offer the best of both worlds.

Market-Linked Growth: Your premium is partially invested in equity and debt funds, helping your money grow over time.
Tax-Free Payouts: Maturity proceeds qualify for tax exemptions under Section 10(10D) provided the sum assured is at least 10 times of the annual premium and the annual premium amount is below prescribed limit of INR 2.5 lakh for ULIPs.
Flexibility: Allows you to switch between equity and debt funds based on market conditions and risk appetite.

Whole Life Policies: Lifelong Coverage and Estate Planning

If you want lifetime financial security, a whole life policy ensures protection for up to 99 or 100 years.

Coverage for Life: Ensures that dependents receive a payout whenever the policyholder passes
Legacy & Estate Planning: Helps in transferring wealth tax-free to the next generation.
Tax Benefits: Premiums qualify under Section 80C, while death benefits remain tax-free under Section 10(10D).*

Riders & Add-Ons: Enhancing Your Coverage

Want to increase your coverage without buying a separate policy? Riders are additional benefits that can be added to existing plans.

Critical Illness Rider: Provides a lump sum payout if diagnosed with severe illnesses like cancer, heart disease, or kidney failure.
Accidental Death Benefit: Offers an additional payout in case of death due to an accident.
Waiver of Premium: Ensures that future premiums are waived in case of disability or a critical illness, keeping your policy active.

Secure your life in just few steps!

To maximize tax benefits and financial security, it’s essential to act before the financial year ends. Here’s how you can get it done efficiently:

Step 1: Assess Your Financial Goals

Consider your current income, liabilities, and future financial commitments. This helps determine how much coverage you need.

Step 2: Compare Policies & Premiums

Use online tools or consult an advisor to compare different plans. Look for the best balance of coverage, affordability, and tax benefits.

Step 3: Check Policy Eligibility & Terms

Read the fine print; understand premium payment terms, claim processes, and policy exclusions before making a decision.

Step 4: Complete Documentation & Payment

Ensure you submit the policy application and pay the first premium before March 31 to claim tax benefits for the current financial year.

Step 5: Review Your Overall Financial Plan

Integrate life insurance with other investments like PPF, ELSS, and fixed deposits for a well-balanced financial portfolio.

Make the smart move: Secure your financial future today!

March is the final call to make smart financial moves, and life insurance is one of the most powerful ways to protect your loved ones while optimizing tax savings. Whether you need pure protection, savings-linked security, or market-driven growth, there’s a policy that fits your requirements and financial goals. If you’re looking for a pure protection plan, you can consider the Reliance Nippon Life Super Suraksha Elite plan that offers a plethora of benefits.

So, act now and maximize your benefits!

*Tax benefits may be available as per prevailing tax laws and are subject to changes based on amendments from time to time, consulting a tax expert is advisable.
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Visit Us: https://www.reliancenipponlife.com/

Mktg/RNLIC/taxsaving Blog/V1/Mar25