the day I have written about implications of New Direct tax code on Personal Finance, I have recieved numerous mails from readers regarding the maturity proceeds of investments they have already done. Also many of them want to know about benefits on yearly commitment in long term investments for many years to come, eg, Life insurance policies Premium etc. Most of us are really nervous and worried about how New DTC will effect their investments
Questions
I have a ULIP policy in which sum assured is 5 times of annual premium. How this will effect when new DTC Comes into effect.
I have invested for various years in ULIP as well as Moneyback Policies, will my maturity proceeds or premature surrender value be taxed?
I have to invest in insurance, what kind of policy should I purchase in order to get maximum benefit?
Here's the answer
The answer is same for all these questions i.e. All investments prior to implementation of New DTC will not be impacted at all as the government has clarified this. However this would hold true only for maturity proceeds and not on recurring premiums.
However its still advised to purchase only those policies where Sum assured is atleast 20 times of Annual Premium be it Pure Life Insurance, Endowment, Moneyback or ULIP policies. This is a clear cut indication that from now onwards spending in Insurance will be encouraged to buy Insurance only, and the same will not be an attractive destination for Investments.
