I finally filed my income tax return for this assessment year, thanks to the generous 5-day extension of the due date. I was a bit worried since I was traveling and couldn’t see myself do it the minute I came back. Still, all is well that ends well. Especially so when it brings some solid knowledge with it.
In this vein, I wrote a post about four interesting reasons why people hesitate to buy life insurance a couple of days ago when I was getting the info together to file my return. In it, I mentioned I would be sharing what I learned about health insurance, and why it shouldn’t be used only as a tax saving tool. Oh yeah, my accountant would be so proud of me!
Health insurance policies are loaded with benefits. The premium you pay towards health insurance for self, family and parents not only provides financial help in case of medical emergencies but also reduces tax liability.
Let’s look at the tax benefits of a health insurance policy first
For individuals, the premium paid towards health insurance policies for self, spouse, children and parents qualifies for deduction under Section 80D of the Income Tax Act. This is regardless of whether your children or parents depend on you. If you opt for critical illness cover or medical insurance riders in a life insurance policy, the premium paid towards these is also eligible for tax benefit under the same section.
The maximum deduction you can avail under these health insurance plans for the premium you pay for yourself, spouse, children and parents is Rs.25,000.00 per year. If your parents are senior citizens, the maximum is capped at Rs 30,000. As a tax payer, you can theoretically maximize your tax benefit to a total of Rs 55,000 & Rs 60,000 if you are more than 60 years old.
Thanks to these tax benefits, most people view health insurance purely as a tax saving tool & do not focus on the real benefits of a health insurance plan.
The main goal of health insurance
An important point of discussion here is the medical inflation in India that is currently in the range of around 15-20%. The medical and healthcare sector in India is rapidly expanding, and if you do not invest in a good healthcare insurance policy, it can drain you of your savings. Just the room rents at private hospitals, expenses for tests, and medicines alone can result in healthcare costs that eat into the savings that you had put aside for other things. Here is where health insurance can help in keeping your family adequately cushioned to deal with unforeseen situations.
Medical cover when you need it
By opting for a mediclaim policy for family customized as per your needs, you will have the necessary medical coverage as your family’s primary earning member, in addition to being in a position to take care of your entire family’s healthcare needs. Besides saving you from the hassle of investing in separate insurance covers for each family member, it allows you to use the entire insurance amount for the treatment of one family member if required. If you have elderly dependents, there are healthcare insurance plan specifically for senior citizens.
What with hectic lifestyles, these days, even without taking into account life’s inherent uncertainty, the risk of contracting a life altering illness is more likely than ever. Rising pollution levels & stressful professional lives put us at risk for conditions such as diabetes & obesity related diseases. As though that weren’t scary enough, the average age for being diagnosed with these conditions is becoming lower.
Investing in a health insurance policy early can help take care of the expenses related to diseases that are age-related, or are a result of your habits. Over the years, the policy covers various critical illnesses such as stroke, heart attack, certain forms of cancer as policy riders and your savings stay intact even when there are unforeseen critical illnesses. The expenses related to the treatment of these conditions can be exorbitant and can catch you unawares.
Sadly, I know about this firsthand. Rather than regret it, investing in a healthcare plan that covers both you and your family can probably ensure that you don’t face this situation. If you don’t have one yet, do consider getting one. If you already have one, great! Explore how it can benefit you besides being a tax saving tool!