Tax treatment of proceeds from termination of ICICI Prudential lifetime insurance policy

Q & A Forum › Category: Insurance › Tax treatment of proceeds from termination of ICICI Prudential lifetime insurance policy

0 Vote Up Vote Down

Prakash asked 9 years ago

In Aug 2008 I had taken ICICI Prudential lifetime insurance policy. I paid one-time lump-sum premiums in 2008, 2009 and 2011. It is about 9 yrs since I started this policy. Now I would wish to terminate and exit the scheme. Am I liable to pay income tax on the proceeds or not? Please advise. Regards , Prakash

Prakash replied 9 years ago

Dear Sreekanth,

Thanks for your immediate response.

I paid three annual premiums during Aug 2008, Aug 2009 and 2011 Aug, respectively. Did not pay in 2010. In all, I had paid 3 annual premiums during 2008 – 20111.

As per your earlier response, if I have paid 3 premiums then I need not pay any income tax on the total withdrawal proceeds (that is, 3 premiums and accruals). Is my understanding correct? Pls confirm. In addition, also pls note that I had not claimed any tax benefit for the premiums paid during the respective years (2008, 2009 & 2011)

Also, can you pls indicate the relevant IRDA clause that provides clarity on this issue.

Thanks and Regards

Prakash

3 Answers

0 Vote Up Vote Down

Sreekanth Staff answered 9 years ago

Dear Prakash, ICICI Prudential Lifetime (Classic/Premier/Maximiser) is an ULIP policy. Did you pay premium in 2010? As the policy was issued before 2010, one should pay at least 3 policy year premiums. If you have paid at least 3 policy year premiums, you can surrender it now and the surrender value is tax free. Kindly read this article....

0 Vote Up Vote Down

Sreekanth Staff answered 9 years ago

Hi, Did you revive the policy in 2011? (did you pay two year premiums??) Mostly, the surrender value amount is tax-free in your hands. Also, you have not claimed any tax benefits, so those can not be revoked now.

Prakash replied 9 years ago

I had forgotten to pay the premium in 2010. Hence paid the third premium in 2011. Subsequently I have not paid any further premiums. Whenever I am checking the latest fund value, it is reflecting the total of 3 premiums and the accruals. Also, can you pls indicate the IRDA clause under which the tax exemption clause is applicable.

Prakash replied 9 years ago

0 Vote Up Vote Down

Sreekanth Staff answered 9 years ago

You may kindly go through this link...

Prakash replied 9 years ago

Dear Sreekanth – Thanks for resolving my queries satisfactorily.

Regards

Prakash