DOUBLE BENEFIT

I am planning to buy a house jointly with my wife and take a joint home loan. Can we both claim benefit in income tax?

If your wife is working and has a separate source of income, both of you can claim separate deductions in your income tax returns. For claiming income deduction regarding the housing loan, the equated monthly instalment (EMI) amount is divided into the principal and interest components.
The repayment of principal amount of the loan can be claimed as a deduction under Section 80C of the Income Tax Act up to a maximum amount of Rs 1 lakh individually by each co-owner. The repayment of the interest portion of the EMI is also allowed as a deduction under Section 24 under the head ‘income from house property’.
In cases where the house is owned by more than one person and is also self occupied by each co-owner, each co-owner shall be entitled to the deduction individually on account of interest on borrowed money up to a maximum amount of Rs 1.5 lakh. If the house is given on rent, there is
no restriction on this amount and both co-owners can claim deduction in the ratio of ownership.

WHICH IS BETTER

I am a 24-year-old and have a term plan for a sum assured of Rs 5 lakh cover for 20 years. The plan will return 15 per cent return of my premium. Should I take another policy with a higher sum assured? Which is better—a pure term plan or a term plan with return of premium (ROP plan) in which premium doubles?
The need for insurance depends on numerous factors like the financial needs of your dependants, your income and the existing savings. A term plan with ROP is a term plan that returns all the premiums paid to the individual if he survives the tenure. This is unlike a regular term plan that has no maturity value. Since an ROP plan returns the amount invested, it charges higher annual premium than a pure term plan. Just like any other (endowment type) life insurance plans, ROP plans, too, have to invest a certain portion of the premium to generate returns to pay up the individual at the end of the term, apart from factoring in expenses like mortality charges and administration expenses (including agent commissions). A pure term plan still remains the cheapest form of insurance. The decision should be based on your risk-taking ability, the capacity to pay premiums and the ability to put balance funds into systematic investment funds.

ONE PLAN FOR ALL NEEDS

Is it not advisable to take one plan covering all your needs instead of taking multiple plans? Is there any restriction on the number of policies that a person can take?
Insurance companies come up with various insurance plans considering the different needs of various people. The need of insurance keeps changing with one’s age and family circumstances. If a single plan covers all your insurance needs at a particular time, it is beneficial to take a single plan to avoid confusion of payment of different policies at different times. But as the needs change, it is better to go for another policy rather than give up on an old policy and look for a plan that shall cover the changed need. There is no restriction on the number of polices one can take. The insurers will not have any problem in selling a policy to you if your financial condition
supports the payment.