Taxation and inflation

Taxation and inflation

Ø  Taxation: the premium paid for life insurance plans qualifies for deduction from taxable income under section 80c of the income tax act. The act specifies certain conditions for tax benefits to be granted. The following condition should be fulfilled:

·         As per current tax laws the premium paid should be 20% ,or less than 20%, of the sum insured; or

·         The sum insured should be five times, or more than five times, the premium paid

Ø  Inflation: over a period of time, inflation can have a big impact on the insurance cover that has been taken out.

Ø  In simple words inflation is the rise in the price of goods and services in the economy and means and  increase in the cost of  living.