Wealth Manag­ment

MillionaireAsia India - - Contents - By Anurag Ras­togi

– 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

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