Claim audit · FY 2026-27
“Life insurance maturity is fully tax-free under 10(10D)”
The condition that decides it
Exempt only when the annual premium is within 10% of the sum assured (for policies from 1 April 2012). ULIPs lose the exemption when aggregate premiums exceed ₹2.5L a year (FA 2021), non-ULIP policies above ₹5L a year (FA 2023); death claims are always exempt.
What the department sees
MEDIUM
Data the Income-tax Department already receives automatically — the reel doesn't mention this part.
The real math
Consider a ₹50,00,000 money-back policy with an annual premium of ₹6,50,000. The premium-to-cover ratio is ₹6,50,000 ÷ ₹50,00,000, which is 13%, above the 10% limit, so the maturity proceeds lose the section 10(10D) exemption and the taxable gain — maturity value minus premiums paid, say ₹12,00,000 — is taxed at slab. A colleague's term-plus-return policy with a ₹30,00,000 sum assured and ₹2,40,000 annual premium has a ratio of 8%, within 10%, so the maturity is fully exempt. For a ULIP with aggregate premiums of ₹3,00,000 a year, the FA-2021 threshold of ₹2.5L makes the proceeds taxable; for a non-ULIP policy with ₹6,00,000 of annual premium, the FA-2023 ₹5L threshold does the same. A death claim is always exempt under 10(10D) irrespective of premium. The reel's blanket 'maturity is tax-free' works only under the 10% ratio and the premium thresholds. For policies issued before 1 April 2012 the premium test was 20% of the sum assured, so old policies are grandfathered, while policies from 1 April 2023 are tested at the 10% ratio. A high-premium single-premium policy is the classic case where the exemption quietly disappears.
Questions people actually ask
There's a right way to do this
Is employer-paid group term life insurance taxable as a perquisite?
Sections: 10(10D) · We audit claims, not creators. Reviewed by Harun Raaj & Associates, Chartered Accountants · All audited claims