Are you taking term insurance to save tax? These 3 tips will be useful.

The current financial year is about to end. Currently the last month of the financial year is going on and now only two weeks are left in this month. After the end of March, the financial year 2023-24 will also end. After that, the new financial year 2024-25 will start from the first date of the next month i.e. 1st April.

This is an important time for taxpayers. This is the last chance to save tax especially for taxpayers coming in income tax net. Taxpayers who want to save income tax must invest in the available options before March 31. Section 80C of the Income Tax Act is very helpful in saving tax. Under this, taxpayers can claim a tax deduction of up to Rs 1.5 lakh. Many taxpayers buy term insurance for this. Zerodha tells taxpayers about 3 common mistakes taxpayers often make when buying term insurance.

Error in core calculation

According to Zerodha, the first mistake people make is calculating the core. For this people follow a rule of thumb of 10 to 15 times annual income which is not correct. Everyone has their own needs and responsibilities, which are different from the average. For this reason, while buying term insurance, a taxpayer should also consider his age, dependents, tenure, expenses, debt, rent, children’s education fees etc.

FALSE INSURANCE FOR INVESTMENTS

Salesmen may encourage you to buy endowment plans or ULIPs, which offer investment returns with death benefits. Taxpayers should avoid buying such plans. These tend to be quite expensive compared to simple projects. The higher the investment, the higher the return or death benefit. Better to buy a simple plan and invest the rest of the money elsewhere.

Unnecessarily long periods of time

Many times people think that the insurance plan should be till death. This is also not true. By the time you are 60 or 70, your dependents will be financially stable. They will be able to take care not only of themselves but also of you and their brothers and sisters. This means that it doesn’t make sense to spend extra on a long-term plan without any need.

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