We should not take Health Insurance..



Health insurance has become imperative for every household, given the escalating cost of hospitalisation and medical expenses in general. However, a lot of us feel it’s a waste of money, as some plans are rather costly and there is no surety about when you will make use of health insurance. In this scenario, if you want to gain some benefit from it, then you must choose a plan that helps you maximise your tax saving. So, in addition to safeguarding you when you face any medical emergency, a well-chosen plan can help you save tax. Don’t Invest In a Single Policy Section 80D of the Income Tax Act allows you to avail income tax exemptions, based on the premiums paid for one or more health insurance policies purchased for your family (spouse & children) and parents. In this scenario it is wise not to park all your funds into one health insurance policy as tax benefit can be claimed for all policies combined.

Most policies offer coverage for individual, spouse and child. As soon as parents are added, the premium shoots up. But if a second policy is purchased for parents only, the premium will be lower as well as you will be able to claim tax benefits for both the policies. Choosing the Right Plan For Parents While the limit for exemption is Rs 25,000 for policies for self, spouse and child if you are below 60 years, in case you are 60 and above, this goes up to Rs 30,000. Having a second premium for parents if they are above 60 will give you an additional exemption of Rs 30,000 and if they are 80 and above, then also you will get the same exemption.

In this scenario assess the situation of your parents, their need and their medical history. To maximise tax saving, it may be beneficial to buy separate policies for your mother and father, especially if one parent is below 80 and one above. But remember that the higher the age, the more the medical check-ups and the more the premium. Also, in unforeseen circumstances if both parents meet with a medical condition, two separate plans will allow you to have two separate funds at disposal, as only one claim can be made in a year in most policies.

The maximum tax benefit under section 80D under all given conditions would be a total of Rs 60,000. So, if all your health insurance plans cross this amount per annum, you will not get any additional benefit, unless there is a case of disability in the family or for self.


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How much tax benefit you can get?

Details Maximum Tax Benefit U/s 80 (D)
If the premium paid by an individual whose age is below 60 years and for the parents whose age is below 60 years age Rs 50 K
If the premium paid by an individual whose age is below 60 years and for the parents whose age is above 60 years age Rs 55 K
If the premium paid by an individual whose age is above 60 years and for the parents whose age is above 60 years age Rs 60 K

Things to Keep In Mind

While availing tax benefits by investing in health insurance may be your priority, make sure you are aware of certain riders and conditions that come with it. Here are the major ones you should keep in mind:

1. No Tax Benefit on Cash Payment:To avail tax benefit, the premium of a health insurance policy should be made through certain banking modes, such as a demand draft, cheque, credit or debit cards, or net banking. However, you can save on income tax, based on expenses incurred for preventive health check-ups for which the payment can be made in cash.

2. Part Payment Benefit: The taxpayer can also claim deduction on part payment made towards paying premium.

3. Lapse Policies: No tax benefit is given for lapsed policies, even if some amount of the yearly premium was made. Tax that you can save because of health insurance

Premium eligible for tax deduction Tax saved under various tax slab (In Rs)
Tax slab of 5% Tax slab of 20% Tax slab of 30%
Rs 25000 128.75 5150 7725
Rs 55000 2832.5 11330 16995
Rs 60000 3090 12360 18540
Tax calculation includes education cess @3 %

You can, thus, maximise your tax savings through health insurance.


Disclaimer: all precautions have been taken posting this post. please check latest rules and regulations before taking health policies. website and writer will not be responsible for any fault.

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