There is a common misconception about insurances is that they are always subjected to a tax deduction. It is true that the insured person can enjoy the benefits of tax exemption after buying life insurance or health insurance. However, the tax deduction benefit is applicable to personal accident insurance only under a specific condition.
According to a deduction in Section 80C, personal accident policies are not eligible for tax deduction.
Superannuation is a programme created for the benefit of its employees. Any personal accidental policy bought under this programme is not applicable for a tax deduction. Moreover, certain policies where the insured receives a lump sum amount on the claim are also not applicable for a tax deduction. These policies include accidental accident insurance, trauma insurance or critical care insurances whose premiums are paid to cover physical injuries.
However, not always personal accidental covers are excluded from tax benefits. One can claim the cost of a premium on the insurance against loss of income. The guidelines to claim insurance premium as a tax benefit are very intricate. One can enjoy the advantage of tax deduction on the policy if they successfully demonstrate that the insurance premium is paid to protect their taxable income. Thus, personal accident insurance can be tax deductible for the small businessmen or traders who pay the premium to secure their earning capacity.
The tax deduction conditions become more difficult to understand in the case of combined policies. Some insurance companies offer a combination of life insurance with personal accident cover. In such cases, the policyholders need to figure out the portion of premium applicable for tax benefit.
Though not always personal accident policy comes with a tax benefit; it is one good insurance product. Personal accident insurance provides coverage for death or disability due to accidents. Not all accidents lead to severe injuries, however, the chance of suffering from major accidents has been increased with the growing population in India. With more than a thousand accident each day, India is a hotspot for road accidents in the world. Considering the recent statistics on accidental deaths in India, having a personal accident cover can be the best way to be prepared for any unfortunate event.
Following are the benefits of personal accident insurance policy:
In case of accidental death of the insured person, the nominees on the policy get sum insured. This amount helps the family members of the departed person to secure their financial status in times of mishap.
When the insured person has to suffer from temporary or permanent disability after the accident, the personal accident cover provides daily expenses up to a certain limit.
Some personal accidental insurance plans cover the treatment expenses for the injuries happened due to terrorist activities.
Although personal accidental cover can be a wise option to secure the future for almost professions, they are highly recommended to certain professionals facing very risky situations often. These professions include journalists, people working in explosive industries, mountaineers, contractors and builders.