Investors must purchase a policy only to ensure adequate risk coverage

Less than two months remains for people to invest wisely and save some taxes before the financial year ends on March 31. Although tax-planning should be done at the start of the financial year, the reality is that most people prefer to invest during the last three months of January, February and March -or JFM months -when it becomes absolutely necessary to act.

Financial planners say that, although most people go for tax-saving options which are most convenient to them, ideally each should plan their tax-saving investments keeping in mind some specific factors like age, income level, risk-taking ability and financial goals. There should not be a one-plan suits-all approach here. It's even better if the annual tax-saving plan becomes an integral part of an individual's financial planning exercise.

The two other articles on this page will give you some idea about the various investment options to save on taxes. Here, we will discuss the advantages of some of the investment options, which ones score over the others and how, and some common tax-planning mistakes that you can avoid.

One very important thing to note here is that since the last Budget in July 2014, people have the option to invest up to Rs 1.5 lakh each year in tax-saving instruments, up from Rs 1 lakh earlier.