Personal accident cover provides financial protection during accidental fatality, disability, or injury. This policy safeguards against the financial implications of unexpected events. The policy offers a lump sum payout to the policyholder or their nominee in case of such an unfortunate event. This cover is mostly available as part of the insurance. However, you can purchase it as a rider to supplement existing life insurance. The coverage amount and premium depend on various factors, such as the individual's age, occupation, and level of risk involved in their work. This type of insurance is crucial for individuals who work in high-risk jobs or lead an active lifestyle. Let us now discuss the most frequently asked question: Is this policy tax deductible?
Is Personal Accident Cover Eligible for Tax Deductions?
Personal accident policies do not qualify for tax deductions as per the deduction provision specified in Section 80C. For example, personal accident cover purchased under a superannuation scheme for employees does not qualify for a tax deduction. In addition, policies that offer a lump sum payment to the policyholder upon a claim are ineligible for tax deductions. Such policies comprise accident insurance and critical care coverage, which aim to provide coverage for physical injuries through premium payment.
While personal accident covers may not always be exempted from tax benefits, claiming a premium on insurance for income loss is possible. The process of claiming insurance premiums as a tax benefit is complex and requires close attention. Policyholders may be eligible for a tax deduction on their personal accident cover if they can demonstrate that the insurance premium is aimed at safeguarding their taxable income.
Besides that, if you purchased health insurance that covers personal accidents, you can claim a deduction for it under section 80D.
What is the Tax Deduction Limit for PA Cover?
Under Section 80D, taxpayers are qualified for a deduction on the premium paid for personal accident insurance plans. The tax deduction limits for personal accident cover are Rs 25,000 and Rs 50,000 for individuals and senior citizens, respectively.
If you are paying the premiums for personal accident insurance covering a senior citizen, you can claim up to Rs 75,000 as a deduction. However, if both the policyholder and you are senior citizens, then the deduction limit gets elevated to Rs 1,00,000. It is important to note that the tax benefits are only applicable to premiums paid through non-cash modes.