The premium that you pay for term, endowment, money back, or unit-linked plans is allowed as a deduction under Section 80C. This deduction lowers your taxable income by a maximum of Rs.1.5 lakhs and helps you save tax. However, the deduction for the premium would be allowed on the lower of the following amounts –
Rs.1.5 lakhs
The actual premium paid
10% of the sum assured
Moreover, in the case of pension plans, the premium paid is allowed as a deduction under Section 80CCC. The limit is Rs.1.5 lakhs which includes the limit of Section 80C.