SUN LIFE CARE

List of Insurance polies for tax exemption in India

In India, insurance policies offer excellent pathways to reduce your taxable income. However, it is important to note that these tax deductions are only available if you choose the Old Tax Regime. The New Tax Regime does not allow deductions under Sections 80C or 80D.

Here is the complete breakdown of insurance policies that qualify for tax exemptions, categorized by the sections of the Income Tax Act:

1. Life Insurance Policies (Section 80C)

You can claim a deduction of up to ₹1,50,000 per financial year for premiums paid toward life insurance policies for yourself, your spouse, and your children.

Term Insurance Plans: Pure risk protection policies with no maturity value. They offer the highest cover for the lowest premium.

Endowment & Money-Back Plans:

Traditional savings-cum-protection plans (like LIC Jeevan Labh or similar plans from private insurers) that pay out a lump sum or regular intervals.

Unit Linked Insurance Plans (ULIPs):

Market-linked investment plans that combine life insurance with mutual-fund-like returns.

Pension/Annuity Plans (Section 80CCC):

Premiums paid for retirement plans from life insurance companies fall under this umbrella (sharing the same overall ₹1.5 lakh limit).

Crucial Rule for Life Insurance:

To claim the 80C deduction and ensure the maturity amount remains tax-free under Section 10(10D), the annual premium must not exceed 10% of the Sum Assured. Additionally, for ULIPs issued after February 1, 2021, maturity proceeds are taxable as capital gains if the total annual premium exceeds ₹2.5 lakh. For other life insurance policies issued after April 1, 2023, the maturity proceeds become taxable if the total annual premium exceeds ₹5 lakh.

2. Health Insurance Policies (Section 80D)

Deductions under Section 80D are over and above the ₹1.5 lakh limit of Section 80C. You can claim deductions for premiums paid for yourself, your spouse, dependent children, and parents.




Covered Individuals	Age Criteria	Maximum Deduction Allowed

Self, Spouse & Dependent Children	All under 60 years	₹. 25,000

Self, Spouse & Dependent Children	If any member is a Senior Citizen (60+)	₹. 50,000

Parents	Parents under 60 years	₹. 25,000 (Additional)

Parents	Parents over 60 years (Senior Citizens)	₹. 50,000 (Additional)

Maximize Your 80D Benefits:

Total Potential Savings:

If both you and your parents are senior citizens, you can claim up to ₹. 1,00,000 (₹. 50,000 + ₹.50,000). If you are under 60 but your parents are senior citizens, you can claim up to ₹. 75,000 (₹. 25,000 + ₹. 50,000).

Health Riders:

If you add a Critical Illness or Surgical Benefit rider to your standard Term Insurance plan, the premium allocated to that rider qualifies under Section 80D instead of 80C.

Preventive Health Check-up:

You can claim up to ₹. 5,000 for routine health check-ups for your family within the overall limits mentioned above. (Interestingly, this is the only health expense allowed to be paid in cash; insurance premiums must be paid digitally or via cheque to claim deductions).

Senior Citizen Medical Expenses:

If your senior citizen parents do not have health insurance (due to age or pre-existing illnesses), you can claim their actual medical expenses (doctor fees, pharmacy bills, hospital costs) up to ₹. 50,000, provided bills are paid digitally.

Summary of Tax-Exempt Payouts (Maturity & Claims)

It isn't just the premium that saves you money; the payouts from these policies are heavily tax-sheltered too:

Death Benefits:

Any lump sum received by a nominee upon the policyholder’s death is 100% tax-free under Section 10(10D) for life insurance, and completely tax-exempt for health insurance claims.

Maturity Proceeds:

Tax-free under Section 10(10D) as long as your policies stay within the premium-to-sum-assured ratios (₹. 10\%₹) and the annual premium caps (₹. 2.5 lakh for ULIPs / ₹. 5 lakh for traditional plans).

Personal Accident Insurance Policy

A personal accident insurance policy is designed to provide complete financial protection against unexpected, violent, external, and visible events. Unlike regular health insurance, it is a fixed-benefit plan that pays out lump-sum amounts or structured allowances based on the severity of the mishap.

Here is a breakdown of the specific types of accidents covered, the core benefit payout structures, and common exclusions.

Types of Incidents Covered

A Personal Accident policy kicks in for physical trauma caused by sudden, involuntary events, including:

Road & Transport Accidents: Car crashes, two-wheeler skids, pedestrian impacts, or train mishaps.

Domestic Casualties: Slip-and-fall injuries (e.g., on wet surfaces or stairs), gas cylinder explosions, or domestic electrical shocks.

Workplace & Environmental Hazards: Structural or machinery malfunctions, falling objects, chemical burns, or electrocution.

Natural/Animal Hazards: Drowning, severe burns from fire, snakebites, or severe insect stings.

Structure of Insurance Benefits

The payout is calculated as a percentage of the Capital Sum Insured (CSI) depending on the nature of the consequence:

1. Accidental Death (AD)

Payout: 100% of the Sum Insured paid as a lump sum to the nominee.

Condition:

The death must occur directly due to the accidental injury, typically within 180 days of the incident.

2. Permanent Total Disablement (PTD)Payout:

100% of the Sum Insured paid to the policyholder.

Covered Conditions:

Complete and irreversible loss of vital functions, such as:

Loss of sight in both eyes.

Physical separation or loss of use of both hands or both feet.

Loss of one hand and one foot, or one eye and one limb.

Total paralysis resulting from the trauma.

3. Permanent Partial Disablement (PPD)Payout:

A fixed percentage of the Sum Insured based on a standard medical scale outlined in the policy.

Common Examples:

Loss of an entire hand or foot: 50%

Loss of sight in one eye: 50%

Loss of hearing in both ears: 50% (one ear: 15%)

Loss of speech: 50%

Loss of a thumb: 25%

Loss of an index finger: 10%

4. Temporary Total Disablement (TTD)Payout:

A weekly allowance (e.g., 1% of the Sum Insured or a capped amount like ₹5,000 to ₹10,000 per week) for a specified duration, typically up to 100 weeks.

Condition:

Applicable when an injury (like a severe fracture) leaves the insured completely bedridden and temporarily unable to perform their daily professional duties, serving as income replacement.

Common Add-On Benefits & RidersMany standard and standalone personal accident policies offer optional extensions to enhance coverage:

Accident Hospitalisation Expenses:

Reimburses actual medical bills, ICU charges, and day-care procedures resulting from an accident (often capped at 10% of the CSI).

Children's Education Grant:

A one-time lump-sum payout to support the education of dependent children in the event of the primary insured's death or permanent total disability.

Ambulance Charges & Carriage of Mortal Remains:

Expenses incurred for transporting the insured to the hospital, or transporting the body from the accident site to the residence.

Key Exclusions (What is NOT Covered)

Personal Accident policies strictly exclude incidents that are not purely accidental or arise from intentional exposure to risk:

Natural Diseases or Internal Medical Issues:

Deaths or conditions caused by heart attacks, strokes, or infections are not covered.

Self-Inflicted Injury: