Section 80C of the Income Tax Act provides deduction of the amount of premium paid even on life Insurance Polices taken in name of spouse . While deduction is fine , there is a catch in this. There is provision of clubbing of income under Income Tax Act by which teh income earned out of assets transfferred to spouse is added in the hand of transferror of asset. In other words , when the LIC pays wife back at the time of maturity and she uses the money for earning interest by doing fixed deposits or any thing in which she does not have to make her own effort, the question of clubbing may arise. This is so even when the insurance policy was issued under Married Women’s Property Act, 1874, under which it has been provided that the insurance policy taken by the husband for the benefit of his wife should be treated as separate property for the wife and kept protected by exempting it from attachment for recovery of any dues against the husband.