Life insurance policies and health insurance policies are useful tax planning tools. In case of life insurance, tax benefits can be claimed under Section 80C of the income tax act for premiums paid toward the policy. The maximum deduction that can be claimed under this section is Rs 1,50,000. Section 80d of the income tax act 1961 allows taxpayers to claim deductions for health insurance premiums paid. The maximum tax deduction that can be claimed under section 80d is Rs 25,000. The proceeds from a life insurance cover are exempt from tax under Section 10(10D).