Tax: 5 reasons why insurance won't save tax

1. No deduction: Under DTC, an insurance policy that offers a cover of less than 20 times the annual premium won't be eligible for tax deduction.

2. Tax on maturity: If the 20 times life cover condition is not met, even the income accruing from the policy will be taxable

3. Lower limit: The tax deduction limit for life insurance will be reduced from the present 1L to 50000 per year. The 50000 limit would also include the amount paid for tuition fees of children as well as medical insurance

4. Tax on withdrawals: Partial withdrawals from an insurance plan before maturity will be taxable under DTC

5. Tax on surrendering: The surrender value of a plan will also be taxable.

6. ULIPs has a lock-in period of 3 years. This has been extended to 5 years now by IRDA.