This time of the year, most of my friends prefer to go and get Insurance policy just because they have to buy one so that they can save tax. I get calls from various Insurance agents to take up policies from January to March time frame and the prominent reason they give me to buy the policy is “Tax Benefit”. I am not very keen on taking a policy just because I get a tax break. I know that it does not work that way.
I don’t mind taking a insurance cover for the purpose of insurance rather than “Tax Benefit”. But the fact is that most of us prefer to take the policy thinking it will reduce our tax bracket. I have done that in the past. I have taken a policy and I do pay a yearly premium. I did not know much about tax at that time and for tax benefit I did take a policy only to learn that it does not make sense. Continue reading