Harshit Shah posted the following comment a few days ago:
Harshit ShahÂ April 17, 2013 at 1:42 pmÂ 
First of all i would like to thank you to make this website which is guiding investor for better investing.
I need your support in understanding none aspect of insurance: Top-up premium in life insurance.
I have taken life insurance policy Kotak invest maxima with five years premium payment and 25 years policy term. I have invested first year premium of one lack rupees. I still have cash surplus which needs to be invested. As per policy document i am free to make top-up up to 10 X first year premium .ie. 10 lacks. There is no top-up premium allocation charge under this policy. The top-up premium shall be lock-in for five years. The top-up premium will require 1.1 to 1.25 times insurance cover.
My question is: What are tax implication if i invest 1 lack rupees additional as top-up and withdraw that amount after five years.?
My request to you is if you can post an article on â€œTop-up in life insurance itâ€™s benefits and tax implicationâ€
Thanks & regards,
Kotak Invest MaximaÂ is covered by 80C and I couldn’t find anything that excludes top up premiums from being considered for 80C deductions so to the best of my knowledge, the money you spend on a top up of this policy should also be eligible for tax deduction.
I also don’t think it will make any difference when you withdraw it after five years.
This plan is also covered under 10 10(D) which states that the amount you receive from the policy will be tax free as long as the premium is less than 10% of the amount assured in every year you pay the premium. If you pay the top up in a certain year is this clause getting violated and if so will the tax benefit under 10 10(D) be removed?
I don’t know anything about this and if someone can leave a comment about it that will be much appreciated.
Also, please note that this post has nothing to do with whether you should invest in Kotak Invest Maxima to begin with or not – I’m just trying to answer the question of the tax angle.