Life insurance is one of the most preferred investment options in India. There are 2 tax benefits offered under a life insurance policy. There are:-

Section 80C: premiums paid are exempted under section 80C of the income tax act, 1961 up to a maximum limit of Rs 1.5 lakhs.

Section 10(10D): the proceeds/benefits of life insurance are not taxable for the deceased's family members under section 10(10D), of income tax act, 1961. However, these rules does not apply to the following amount:-

• Sum received under section 80dd(3) or
• Any sum received under keyman insurance policy, or
• Any sum received other than as death benefit under an insurance policy which has been issued on or after April 1, 2003, and if the premium paid in any of the years during the term of the policy is more than 20% of the actual capital sum assured.
• Under the finance act 2012, the exemption under section 10(10D), the benefit you receive under life insurance policies issued on or after 1^St April 2012, shall be available only if the premium payable in any of the years is not more than 10% of the sum insured. However, the death benefit under the plan is always tax-free under sec 10(10D).