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Life insurance policies provide financial assistance to families in case of an untimely death and helps in wealth accumulation.

According to Section 10(10D) of the Income Tax Act, 1961, death benefits are always tax-free.

Sum assured received on maturity is completely free of tax under Section 10(10D).


Tax exemption available on policies issued after April 01, 2012, provided total premiums paid do not exceed 10 percent of policy sum assured.


For policies issued before April 01, 2012, the sum assured would be free of any tax implications if the total premiums do not exceed 20% of the assured amount.


For ULIPs with yearly premiums up to 2.5 lakh issued on or after February 01, 2021, the return on maturity would be treated as capital gains and taxed under Section 112A.


To avail of tax relief under Section 80C of the Act, life insurance policies must meet certain conditions.


Click here to know more about the taxation of life insurance policies.

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How are life insurance policies taxed?

As per Section 10(10D) of the Income Tax Act, 1961, death benefits are always tax-free. Maturity benefits, however, are taxed based on the premiums.

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How are life insurance policies taxed?

As per Section 10(10D) of the Income Tax Act, 1961, death benefits are always tax-free. Maturity benefits, however, are taxed based on the premiums.

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