My wife and me have life insurance policies of ₹25 lakh each. My wife does not have any income. Can I claim deduction u/s 80C in respect of the premium paid for her?.
Premiums paid by an individual for life cover taken for self, spouse, and children are eligible for the deduction u/s 80C. As far as payment of premium for children is concerned it is not necessary that the children should be dependent on you. So the child for which you can pay the life insurance premium can be major or minor, married or unmarried. This can be used to optimise the tax outgo in the family as the earning children have so many eligible items like school fee and repayment of home loan under Section 80 C that in most of the cases these items overflow their bucket of section 80 C whereas the parents specially the retired do not have many avenues to claim deduction under Section 80C. So they can pay the life insurance premium on the life of their earning children which otherwise would have not been eligible for deduction in their hands. Please note the children can not claim deduction for payment of life insurance on the policies of their parents but can claim deduction under Section 80D for payment of health insurance premium even if the parents are not dependent on the child.
Let me tell you the purpose of buying life insurance is to protect the dependent family members in the eventuality of earning family member’s death and should never be bought for the purpose of saving taxes. Since your wife does not have any income, you should not have bought any life insurance policy on her life and it would make more financial sense for you to have taken a policy of ₹50 lakh on your life instead of distributing the cover, unless there are some valid reasons to do so which I am not able to appreciate.
Source By: livemint
