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Home > Services > FAQs > About Insurance & Tax Benefits

Frequently Asked Questions

 
 

1.
What does my family get on my death?
 
If death takes place during the term of the insurance policy, then the nominee receives the sum assured plus the bonus, if any.
If the policy is a ’with bonus’ policy or ’with participative profits’, the bonus is payable for the number of years the premium has been paid, in addition to the sum assured.
 
 
If death takes place due to an accident, and the insured has purchased the accident benefit rider, then double the sum assured (up to a limit of Rs 500,000-10,00,000; varies by company), is receivable by the nominee.
Even if an additional term rider has been purchased, double the sum assured would be receivable by the nominee.
 
 
If death takes place after the policy has matured, then the nominee does not receive anything from the insurance company, unless specifically mentioned in the policy. Certain policies offer to cover the insured for the sum assured or a part of the sum assured, even after the policy has matured. (The insurance company would mention such details in the brochure and the policy.)
 
2.
What do I get if I survive the term of the policy?
If you have purchased a term policy, you may not receive any money from the insurance company upon maturity. However, some companies offer a term policy with return of premium or the sum assured upon maturity.

For policies that offer bonus or profits upon surviving the term of the policy, you would receive the sum assured along with the accumulated bonus (if you have a with bonus policy) for the term of the policy. For example, if you have insured yourself for 25 years you will receive the sum assured plus the accumulated bonus for 25 years.
 
3.
Will my family receive the insurance amount immediately after my death?
Usually the proceeds of the insurance policy are made available to the nominee in a period of 3 months; provided all the relevant paperwork has been done. If you have purchased a policy for your child, then please verify the details of the policy. Few children’s policies offer no money to the nominee upon the death of the proposer or the parent.
 
4.
How do I collect the maturity amount from the insurance company?
Usually, insurance companies send information regarding the maturity of the policy in advance, along with the forms to be filled and the documents to be sent. If the required documents are sent duly completed and signed, the payment is sent by post or in certain cases, even directly credited to your bank account.
 
5. What are the Income Tax benefits available under insurance policies?
  Life Insurance Policies
Income tax benefit/deduction is available under section (u/s) 80C of the Income Tax Act, 1961 ("Act). However, in case the premium paid during the financial year exceeds 10% of the sum assured, the benefit will be limited up to 10% of the sum assured. Income tax exemption u/s 10(10D) of the Act is available at the time of maturity/surrender, subject to the premium not exceeding 10% of the sum assured in any of the years during the term of the policy. Death proceeds are not taxable.

Insurance proceeds, which are taxable u/s 10(10D) of the Act, may be subject to TDS as per the prevalent income tax laws applicable to Resident Indians and Non Resident Indians (NRI’s)*.

* Subject to Double Taxation Avoidance Agreement (DTAA) in case of NRI’s.
 
  Pension/Annuity Policies
Income tax benefit/deduction is available u/s 80CCC of the Act. On vesting, the policy holder can currently commute up to one-third of the policy proceeds which is exempted from tax u/s 10(10A)(iii) of the Act. The non-commuted pension proceeds taken in the form of immediate annuity is taxable in the hands of recipient. The lump sum death proceeds are not taxable.

Surrender/Annuity proceeds under Pension policy are taxable in the hands of recipient. In case of Non Resident Indians (NRI’s), TDS may be applicable on such surrender proceeds as per the prevalent income tax laws, subject to DTAA.
 
  Keyman Policies
No deduction u/s 80C of the Act is available. Any sum received (including death) under Keyman policy are taxable u/s 10(10D) of the Act in the hands of recipient and may be subject to TDS as per the prevalent income tax laws applicable.
 
  Health Riders/In-built Benefit
In case of premium paid towards Health Riders (i.e. Critical Illness etc), deduction u/s 80D is available.

Disclaimer: All the abovesaid provisions, as applicable, are as per the prevalent income tax laws in India and subject to change from time to time. Please consult your tax advisor for details. Also you may visit http://www.incometaxindia.gov.in for further details.
 
6. What would be the taxes/cess applicable on insurance premium/ULIP charges?
  Service Tax/Cess/GST (currently only in case of J&K residents) and/or any other statutory levy/ duty/ surcharge, shall be charged at the rate notified by the State Government or Central Government of India, on the following:
 
  In case of Non-Linked Insurance/Traditional Plans:
 
    Base premium
    Rider premium (if any)
    Any other charge as per the product feature
  In case of Unit Link Insurance Plans (ULIP):
 
    Mortality Charges
 
    Policy Administration Charges
 
    Fund Management Charges
 
    Discontinuance / Surrender Charges, if any
 
    Partial Withdrawal Charges, if any
 
    Any other charge as per the product feature.
 
    Disclaimer: All the abovesaid provisions, as applicable, are as per the prevalent tax laws in India and subject to change from time to time.
 
For comments, questions or suggestions, please contact us.
E-mail: info@sbilife.co.in
Call Toll Free 1800 22 9090 
 
For product enquiries and for appointments with an SBI Life Insurance Advisor: Send e-mail to sales@sbilife.co.in
 
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