What is the tax implication for benefits from a personal accident and sickness insurance policy?

The selected answer is accurate because the benefits paid out from a personal accident and sickness insurance policy are typically received tax-free by the policyholder. This means that individuals can enjoy the financial protection offered by the policy without incurring an additional tax liability on the benefits they receive during a period of sickness or following an accident.

In most cases, however, the premiums paid for this type of insurance are not subject to premium tax, which aligns with the principle that individuals should be incentivized to protect themselves and their families through insurance without facing prohibitive tax burdens. This tax treatment encourages individuals to take out personal accident and sickness insurance to safeguard their financial well-being.

Overall, understanding the tax implications of insurance policies is crucial for policyholders, as these details can significantly impact their financial planning and decision-making.