– Why it is worthwhile to set aside some part of your finances for health insurance, which is also an effective tax saving tool
Knowing fully well the fact that health is the pivot around which other aspects of life revolve, it would be worthwhile to set aside some part of your finances for the sake of health insurance, which is also an effective tax saving tool
View health as an investment and never as an expense”, goes the age-old dictum. For us, health is a broader word in its holistic sense; it embraces not just the physical state but the psychological wellbeing as well. A healthy individual has greater productivity and a profound life as well.
Many of us may have different ideas of investing in our health. While all these investments may be very important and desirable for remaining healthy but there is something that is equally important which only a few believe in; and is investing in health insurance. Most hesitate while purchasing insurance, primarily due to the perception that if no claim is made in that financial year, then the money is wasted.
Despite numerous direct benefits, many people still refrain from buying a health cover. Firstly, individuals fail to understand that insurance can be very helpful during sudden medical emergencies. Secondly, most of them are unaware of the benefits health insurance promises and people in their late 30s and early 40s do not consider health insurance as they are in their pink of health. It is important to start investing early as a policy purchased at an earlier phase in life would go a long way to serve a person in the twilight period.
However, apart from surmounting the difficulties arising out of increasing healthcare costs, health insurance acts as an efficient tax saving tool as well.
For example, one can avail tax benefits on the premium paid under Section 80D for health insurance which effectively reduces the cost of insurance covers, leaving one with more money to invest, save or even spend on necessary things. In the event of an admissible claim, customer will be eligible to full sum insured and thus obliterating the concept of loss of premium, if any.
Conditions for tax deduction on health insurance
A health insurance, besides protecting one against medical problems as well as critical illnesses which involves huge spends, is also one of the best options available for investment in the market today. A policy holder can avail a deduction of 25,000 to 60,000 annually on the health insurance premium which covers themselves, their spouse, and dependent children. The limit goes up, in case the insured is 60 years or above. One can also save on income tax based on expenses incurred for preventive
health check-ups. Moreover, a deduction of up to 35,000 is allowed for medical treatment and preventive health check-up of parents who are senior citizens.
Also, as proposed in the new 2018 budget, if you have a multi-year single premium policy, then you are eligible for proportionate deduction of the entire premium over multiple years. This mean, if you have paid 40,000 for a 2 year policy, the deduction can claim is 20,000 each year.
In a nutshell
The fact is that a health insurance policy offers many benefits throughout an individual’s life-cycle. Buying a health insurance plan is critical as it ensures quality medical care for one’s family especially at a time when the cost of hospitalisation has become very expensive. As a principle, a health insurance plan reduces the financial burden.
In India, there are deductions allowed under various sections of the IT Act. Hence tax saving is an essential part of financial planning which –if done smartly – can lead to a financially liberating life. A health insurance plan can virtually prevent you from being bankrupt by those hefty hospital bills or medical emergencies. In effect, these give you enough peace of mind regarding two important aspects in life – the financial well-being of your family and their health. Thus, one must see health insurance as an essential investment option than just a tool to save taxes.
The fact is that a health insurance policy offers many benefits throughout an individual’s life-cycle