Eligibility to purchase insurance

• A Hindu Undivided Family (HUF) can buy insurance policies in the name of its members
• The policy must be taken for the benefit of a member using HUF’s funds
• HUF cannot be the life assured but can be the policyholder if paying the premium
• Insurance must serve the interest of the family and be recorded in HUF accounts
• The Karta usually signs insurance documents on behalf of the HUF

Types of insurable policies allowed

• Life insurance policies in the name of coparceners (sons, daughters, or Karta)
• Health insurance (Mediclaim) for family members under Section 80D
• Term insurance where the HUF pays the premium for the Karta or a key member
• Group insurance or accidental insurance coverage for HUF business employees
• Personal insurance if it directly relates to a family member’s well-being

Tax benefits for insurance premium

• Life insurance premium paid by HUF is eligible for deduction under Section 80C up to ₹1.5 lakh
• Health insurance premiums are deductible under Section 80D up to ₹25,000 or ₹50,000 for senior citizens
• The policy must be in the name of a member, and premium paid from HUF’s income
• The deduction is allowed only if the insurance is for a legitimate HUF member
• Premiums paid for non-members or from personal funds are not deductible in HUF’s return

Documentation and policy ownership

• Proposal form must clearly mention HUF as the policyholder and the insured individual
• PAN of HUF and identity/address proof of Karta are needed for KYC
• The HUF should maintain records of the premium payment and insurance certificate
• Nomination can be made in favor of any coparcener or dependent as per policy terms
• Premium receipts should reflect payment from the HUF’s bank account

Claim and maturity handling

• Claims received from insurance policies are credited to the HUF and treated accordingly
• Maturity amount from a life insurance policy is usually tax-exempt under Section 10(10D)
• In case of health insurance, reimbursement or cashless claims benefit the insured member
• If the claim is taxable (in rare cases), it will be included in the HUF’s income
• Proper declaration of claim receipts helps ensure transparency during assessments