In 2015, women are much ahead of just being homemakers! Be
it any profession, they often become the frontrunners and win the race much
like their male counterparts. Contrary to the popular notion, they earn hefty
salaries; they run their families hand in hand with the men.
Therefore, it is equally important for women to save tax too
alongside having a well-planned financial goal. Tax planning involves taking
into consideration various factors such as the age of the asses see, total
income earned and the financial goals of the asses see as an individual and
from the perspective of her family.
Most women start looking at tax saving avenues only in the
January-March quarter of the financial year so as to submit the proof of
investments to their employer by the end of that financial year. This is the
time of the year when all financial advisors, banks or other financial
intermediaries will also start approaching individuals with their tax saving
ideas. However, it is prudent to consider and start investing early for
tax-planning purposes. Today, there are numerous investment options available
to woman investors which help save taxes.
Among other financial products, insurance should definitely
be a crucial tax saving option for a woman investor to include in her financial
portfolio. Women often do not consider insurance, both life and health, as
priority. However, with rising medical costs and growing incidents of lifestyle
related illnesses, it makes sense to invest in an insurance plan that covers
such exigencies. Investing in insurance is not only quite hassle-free, but it
also provides for projected living costs, education expenses and retirement
benefits.
Under Section 80C of the Income Tax Act, individuals have
been provided many tax reliefs such as tax free investments of up to Rs.
150,000. One of the best tax
saving plan options under this category is life insurance. It is a known
fact that a life insurance policy is the most cost effective tool to provide
financial protection to a woman’s family in case of unforeseen eventualities.
However, the quantum of life insurance depends upon many factors such as
income, expenses, liabilities, goals etc.
Term insurance may be a right instrument for lump sum life
insurance cover, whereas ULIPs are the best option for steady and sustained
investment with an investment goal of 10-15 years. Since, tax benefit is the
inherent advantage which comes with this product; she should consider this
option only after analyzing her needs. It is also important to know that for
policies starting April 1, 2012 and later, Section 80C of the Act currently
allows a deduction on premium paid on life insurance policy only if the annual
premium paid is less than 10% of the sum assured.
In 2013, the limit of the annual premium was increased from
10% to 15% of the sum assured for persons with disability or severe disability
or suffering from diseases or ailments specified in the Income Tax Act. Thus,
for these people, if the annual premium paid was up to 15% of the sum assured,
the same could be availed as a deduction below Rs 1.5 lakh tax limit under
Section 80C.
Another important option is for premium paid for health
insurance. Under Section 80D of the Income Tax Act, one can avail deduction of
up to Rs 15,000 for self, spouse and dependent children, while an additional Rs
20,000 is available for parents above the age of 60 (who fall in the senior
citizens category) on premium paid for a health insurance plan.
These limits can include expenses of up to Rs 5,000 on
preventive health check-ups. This is especially beneficial to women over the
age of 30 – who are advised to have routine health check-ups as a matter of
routine in order to detect and prevent specific illnesses. Cash payments for
health check-ups are eligible for income tax deduction but health insurance
premiums paid in cash are not.
Notwithstanding the above mentioned advantages, a detailed
analysis should be done on the requirement and benefits of insurance policies
before buying the right scheme. And, this is true for any financial instrument.
Finally, she should review her insurance cover from time to time and increase
the coverage to meet her financial goals. While tax-saving is important; the
primary goal must be protection.
[Source: http://lifeinsurance.bajajallianz.com/tax-insights/life-insurance-an-apt-tax-saving-tool-for-women-too/]
