Insurance agents are happily selling policies that are not eligible for tax benefits. According to ET Wealth, till last week, a well-known insurance portal was selling Jeevan Vriddhi, which is a single premium plan from LIC. This plan covers the buyer for 5 times the premium. They were actually faking this by stating that the policy will offer the tax benefits under Section 80C and Section 10(10D).

This kind of mis-selling is on the rise. Insurance agents are approaching buyers with attractive benefit illustrations without actually educating them on post-budget tax implications.

The Budget 2012 has stated that policies issued after April 1 must meet the criteria of 10 times the annual premium (also known as 10x norm) to claim tax benefits. “The Section 80C tax deduction is not as important for insurance buyers as the Sec 10 (10D) tax exemption,” says V. Srinivasan, Chief Financial Officer of Bharti AXA Life Insurance, as quoted by ET.