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June 14, 2026
The Dispatch

Definition

Section 10(10D)

Section 10(10D) of the Income-tax Act exempts life insurance proceeds from tax, subject to conditions on the premium-to-sum-assured ratio and premium thresholds.

Maturity and death proceeds from a life policy are tax-free under Section 10(10D) only if the annual premium does not exceed the prescribed percentage of the sum assured (currently 10% for policies issued after a certain date). Recent Budgets added aggregate annual premium thresholds: high-premium ULIPs and other non-term savings policies above the limits lose the exemption, with gains taxed.

This makes the tax treatment of bundled plans more nuanced. Death benefits to nominees generally remain exempt. Buyers should check both the premium-multiple rule and the new thresholds before assuming maturity proceeds are tax-free.

Related terms

  • Guaranteed Return PlanA guaranteed return plan is a non-par life insurance product that promises a fixed, pre-defined payout at maturity along with a life cover.
  • Maturity BenefitThe maturity benefit is the amount a savings-linked life policy pays the surviving policyholder when the policy term ends.
  • Unit Linked Insurance PlanA Unit Linked Insurance Plan (ULIP) is a life insurance product that combines life cover with investment in market-linked funds chosen by the policyholder.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.