Deduction is available under Section 80C of Income Tax Act, 1961 for the premium paid (max. up to 20% of sum assured) on life insurance policies with a maximum annual ceiling of Rs.1,00,000 , irrespective of the Gross Total Income.
Under section 10(10D) of Income Tax Act, 1961 maturity benefits are tax free in the hands of policyholders if, at any point of time during the policy life ,premiums paid in any year do not exceed 20% of the basic Sum Assured.
Life insurance premium paid by you for your wife/husband's policy qualifies for a deduction under Section 80C of the Income Tax Act, 1961.
If you stop premium payments of your policy, it amounts to discontinuation of the policy and disqualifies for Income Tax.
If you chose to discontinue a Unit Linked Insurance Plan before paying for 5 years from commencement of policy, you are not entitled to any tax benefits in the previous year in which the taxpayer terminates the plan .The quantum of deduction already taken in the preceding years would be deemed as the income of the taxpayer in the year in which policy is terminated.
�In computing the total income of an individual or HUF, deduction is allowed for any sum paid by any mode other than cash out of his income chargeable to tax. (i) to effect or to keep in force an insurance on the health of the individual, his or her spouse or dependent children or member of HUF, and (ii) to effect or to keep in force an insurance on the health of the parent or parents of the individual Deduction amount - Up to Rs.15,000 for self, spouse, children and Rs. 15,000 for parents. (Rs. 20,000 for parents if they are senior citizens).
All premiums and charges are subject to applicable taxes including service tax as per the prevailing tax laws.
Under section 80C, you can avail of a maximum benefit of up to Rs 1 lakh on the premium paid towards a pension plan. One maturity, one-third of the maturity amount withdrawn in form of cash is tax-free. Monthly pension receipts will be treated as income in the hands of the assessee and taxed accordingly.