What is a Single Premium Life Insurance?
A life insurance policy where a lump sum is paid in return for a death benefit that is guaranteed until your death is known as A Single Premium Life Insurance(SPLI). since it is a SPLI or recurring premium, you are eligible for tax benefits under Section 80C of the Income Tax Act, 1961. This standard is appropriate for both single premium insurance as well as regular insurance policies. These changes apply to the policies that are issued on or after the 1st of April 2013. Indeed, your maturity proceeds on the SPLI are also tax-free.
If the annual premium had not exceeded 20% of the actual sum assured then earlier allocation permitted an exemption. Please consider, the deduction for life insurance premium regarding insurance policies issued up to 31st March 2012 must not exceed 20% of the sum assured.
– Any money collected from a life insurance policy are eligible for a tax benefit under Section 10 (10D) only if the lowest sum ensured across the policy term remained 10 times the single premium paid.
– The tax benefit under Section 80 C is available only if the annual premium is less than 10% of the sum assured.
Maturity exemption details
The maturity revenue is also tax-free if the given conditions are fulfilled. To reiterate, for the maturity revenue from any Single Premium Life Insurance to be tax-free, the sum assured across the policy duration must be at least 10 times the single premium.