For years, “save tax under Section 80C” was the number-one reason agents sold LIC policies. In 2026 that pitch is largely outdated — and it is worth knowing why before you buy a policy for tax reasons.
Under the new tax regime, 80C is gone
The new tax regime is now the default in India, and most taxpayers have moved to it because of its lower slab rates. Under the new regime there is no Section 80C deduction — so the premium you pay on an LIC policy gives you no income-tax rebate. If you are on the new regime, buying insurance to “save tax” simply does not work.
Where 80C still applies
Section 80C still exists, but only if you deliberately stay on the old tax regime. There, life-insurance premiums qualify for a deduction of up to ₹1.5 lakh a year (shared with PPF, ELSS, EPF, home-loan principal and so on). Fewer and fewer people choose the old regime, so for most readers this no longer moves the needle.
The maturity is still tax-free (with a catch)
The genuinely useful benefit that survives in both regimes is Section 10(10D): the maturity and death proceeds of a life-insurance policy are tax-free, provided the premium stays within the prescribed limits (broadly, premium not exceeding 10% of the sum assured, and — for policies bought after April 2023 — total annual premium up to ₹5 lakh for the exemption). ULIPs have their own separate cap.
The honest takeaway
Do not buy an insurance policy for the tax break any more — for most people it has quietly disappeared. Buy protection because you need cover, and buy a savings plan because you want guaranteed, tax-free growth on the safe part of your money — not because of 80C. Build the right mix with Plan Banao.
Educational information, not individual tax advice. Tax rules change — confirm current limits with a tax professional.