List of Insurance Deductions in Income Tax

If you're paying for life insurance, health insurance, or related premiums, the Income Tax Act allows you to claim deductions and save tax under different sections. Here's a clear and simple guide to all of them.

✅ 1. Life Insurance Premium – Section 80C

• Who can claim? Individuals and Hindu Undivided Families (HUFs)
• Deduction limit: Up to ₹1.5 lakh (combined limit under 80C)
• Eligible policies:
  • Life insurance for self, spouse, or children (dependent or independent)
  • Policies from LIC or any other IRDAI-approved insurer

🚨 Important Conditions:

• Policy issued before 1 April 2012 → premium ≤ 20% of sum assured
• Issued after 1 April 2012 → premium ≤ 10% of sum assured
• For disabled individuals (Section 80U) or those with specified disease (80DDB) → limit is 15%

✅ 2. Health Insurance Premium – Section 80D

• Who can claim? Individuals and HUFs
• For whom? Self, spouse, children, and parents

💰 Deduction Limits:

Insured Person	Age < 60 Years	Age ≥ 60 Years
Self, Spouse, Children	Up to ₹25,000	Up to ₹50,000
Parents (Separate Limit)	Up to ₹25,000	Up to ₹50,000

💡 Max deduction possible: ₹1,00,000 (if you and parents are both senior citizens)

💊 Also includes:

• Preventive health check-ups (within ₹5,000 limit, part of total deduction)
• Premium for critical illness or top-up health plans

✅ 3. Term Insurance (Also under Section 80C)

• Term plans also qualify for deduction under the ₹1.5 lakh limit of Section 80C
• Must be from IRDAI-registered insurer
• Premiums must not exceed 10% of sum assured (for plans bought after April 1, 2012)

✅ Tip: Even online term plans are eligible for deduction

✅ 4. Insurance for Disabled Dependents – Section 80DD

• Deduction for insurance or maintenance of a dependent with a disability
• Fixed deduction:
  • ₹75,000 (normal disability)
  • ₹1,25,000 (severe disability)

❗ Disability must be certified under the rules of the Act

✅ 5. Health Insurance for Critical Illness – Section 80DDB

• Deduction for treatment of specified diseases for self or dependent
• Conditions apply and medical certificate is required

🧮 Deduction Limits:

• Up to ₹40,000 (below 60 years)
• Up to ₹1,00,000 (senior and super-senior citizens)

✅ 6. Unit Linked Insurance Plans (ULIPs) – Section 80C

• Premiums qualify for deduction under Section 80C
• Must be held for minimum 5 years
• If terminated early, earlier deductions get reversed

📌 Returns from ULIPs may be taxable if annual premium exceeds ₹2.5 lakh (as per Budget 2021 amendment)

✅ 7. Sukanya Samriddhi with Life Cover (Combo Plans)

If a savings plan includes a life insurance component, like some child insurance policies, the premium still qualifies under Section 80C, up to the ₹1.5 lakh cap.

🧮 Total Deduction Possibilities (If Applicable):

Section	Type of Insurance	Max Deduction
80C	Life/Term/ULIP/Combo Plans	₹1.5 lakh
80D	Health Insurance for family + parents	₹1 lakh (combined)
80DD	Dependent with disability insurance	₹75,000 / ₹1,25,000
80DDB	Critical illness insurance or expenses	₹40,000 to ₹1 lakh

📌 Final Thoughts

Insurance is not just a protective shield—it’s also a smart way to reduce your tax outgo. By understanding which premiums are deductible and under what conditions, you can optimize your investments while staying compliant with the tax laws.

💡 Pro tip: Always pay premiums in non-cash mode (online, cheque, etc.) to qualify for tax deductions.

FAQs

1. Can I claim tax deduction for health insurance?

Yes, under Section 80D, you can claim up to ₹25,000 for self and family, and another ₹25,000–₹50,000 for parents depending on their age.

2. Does term insurance premium qualify for income tax benefit?

Yes. Term insurance premiums are eligible for deduction under Section 80C, within the ₹1.5 lakh annual limit.

3. What is the maximum tax benefit I can claim for life insurance?

Under Section 80C, you can claim a maximum of ₹1.5 lakh for life or term insurance premiums.

4. Can I get tax benefits on insurance for my dependent with a disability?

Yes, under Section 80DD, you can claim ₹75,000 for normal disability and ₹1,25,000 for severe disability.

5. Is ULIP premium tax-deductible?

Yes, ULIPs qualify under Section 80C, but tax-free maturity benefit only applies if the annual premium is ₹2.5 lakh or less.

6. Are preventive health check-ups also eligible for tax deduction?

Yes, preventive health check-up expenses up to ₹5,000 are included in the overall Section 80D limit.