Uncertainty in the stock market and sliding fixed deposit rates have made life insurance the most preferred tax-saving instrument for the salaried class, a study said.
“About 79 per cent people prefer life insurance vis-a-vis other tax-saving instruments such as post office savings, equity-linked saving schemes and fixed deposits,” ICICI Prudential Life Insurance said in a study.
About 89 per cent of the respondents out of 900 said the investment made in the last two years varied from traditional products, unit-linked insurance plans and pension plans.
The survey, which was conducted in three metros — Delhi, Mumbai and Chennai — takes into account a household having monthly income of Rs 40,000. Such a household, on an average, has two policies.
The survey conducted with the help of IMRB International said investment in life insurance is because it has security aspect and comfort of investment in term of ease of payment, good policies and good service.
It is driven by the need of protecting family against uncertainty, it said.
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However, the information about the benefits attached to investment in life insurance product is low, it said.
Awareness on the tax exemption levels under various sections is low, it said, adding only 17 per cent of respondents in the three metros are aware of the maximum amount that can be invested under life insurance for availing tax benefit.
About 16 per cent of the respondents are aware of Section 80c, under which a policy ho\lder can save tax.