So many people are under the mistaken impression that they cannot deduct their life insurance premiums as an investment when in actual fact this is completely allowed. The plain fact is that the premiums on your policy are deductible as a tax-deduction and are also treated as an investment in certain circumstances. You can deduct the premiums you have paid on your policy as an investment every year on your taxes, making them a form of income for the year.
Life Insurance Policy
Some policies however will give you deductions regardless of your age and/or how much you have invested in them. There is also section 80c that allows you to claim a deduction for amounts paid for disability or life insurances from prior years, but you have to be aware that there may be limits in place for claiming this.
As far as the life insurance policy is considered an investment, then there are some rules you must know before making a claim. If you do invest in a provident fund, then you can claim deductions of up to the total amount invested plus interest, but this will only be available if the provident fund is the major part of your income or savings Burial insurance. Your choice of investments is a factor in how much you can get deductions for and how much these will reduce your taxable income.
Any insurance policy purchased for investment purposes must be held within the insurance company’s investment division and it is important that you check with the insurance policy company regarding this.
If you do invest in an insurance policy as an investment and the policy is held in the investment unit, then this will be considered a qualifying transaction for your retirement benefits, but there are still other rules regarding investments and your retirement benefits. It is important to discuss your plans with your advisor and seek his or her professional advice before making a claim.