18 June, 2016

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How would Health Insurance help in Tax Savings

How would Health Insurance help in Tax Savings

 

Well, the return filing season is approaching.And for those of you, who are rushing to save tax by investing in approved instruments, will get fair idea after reading this article.This article deals with health insurance and how does investment in health insurance serves dual purposes.

Why health insurance?

 

Health Insurance basically is taken to protect you financially in case of health emergencies and contingencies.Hence , health insurance plans are necessary as they facilitate the person to afford the medical expenses at once , without actually affecting much monthly income source.

First of all , the person should opt for health insurance cover for him , his spouse and children.Also not to ignore , health insurance for the parents is the second most important thing.This would save the person from one time huge expenses which will shed considerable chunk of salary.

 

Why opt for health insurance when you get insurance cover from the company?

 

Nowadays all well settled companies provide health insurance benefit as a perquisite or added benefit.This allows the employee to cover his emergency expenses like delivery expenses etc.However no one cares to analyse this group plan to check whether it is sufficient individually.These plans are devised on certain assumptions, which may or may not be the facts of the case , in case of every employee.

While analysing the current group health insurance plan , one should note the following things.

 

- Coverage with respect to critical illness and diseases

 

- How many dependents could be covered

 

- Sum assured

 

- Other facilities like provision with respect to hospitalization expenses etc.

 

- Does the plan give total third party settlement which will cover total expenses?

 

- How fast the settlement takes place?

 

- The possibility for policy customization (which is nil as this plan is devised for a group of employees and cant be customized for single employee)

 

- Continuity of plan (which will be as long as the employee is in the current job)

 

- Other factors like compatibility and viability of the plan as along lines with escalated health care expenses etc.

 

Benefit of Health Insurance policy over group insurance

 

- Every person is different and every family has its own history for illness and diseases.Individual health insurance policy can be customized with various options to suit such family history.Such customized plan will gain edge as it will cover critical illness or surgeries , which the person may be prone to.

 

- Flexibility of opting for certain combinations like hospitalization expenses cover etc. would be possible where the person opts for health insurance plan individually.

 

- The group health insurance plan exists only till you are in the job.What if you get out of the job or retire and you need money for hospitalization? At such times , most of the employees at an age where the premiums for health insurance are much costlier.So you need to pan health insurance policy at much earlier age and while you areas till in job.

 

- This is an age where even dental care is an expense which you would have to plan for.The essential health care expenses have escalated like anything.In such age , it is really important to go for health insurance policy which will take care of lumpsum expenses like surgery or hospitalization expenses.

 

Taxation benefit

 

Where you are looking at health insurance from viewpoint of securing finance for health care expenses, it also serves another purpose.Your health insurance policy can save tax as well.the provisions are mentioned below.

 

- Health Insurance policy investment comes under section 80D.Premium paid for health policy which covers medical expenses as well as critical illness expenses,would be eligible for tax benefit under section 80D as well.

 

- Benefit available

 

For the assessee , spouse and children– Rs 25000

 

For the parents who are senior citizens – Rs. 30000

 

Total benefit – Rs.55000

 

For the assessee (senior citizen) , spouse and children– Rs 30000

 

For the parents who are senior citizens – Rs. 30000

 

Total benefit – Rs.60000

 

- The condition is that payment of premium should be via mode other than cash.

 

- Tax benefit of section 80D is also extended to LIC policy with additional rider for critical illness cover.This

has to be exclusively mentioned on the policy that the policy can be claimed under section 80D.

 

- Rs.5000 towards preventive health check up is included in threshold of Rs.25000 or Rs.3000 as the case maybe.This would mean that , where person undergoes preventive health check up , then only he will be able to claim whole Rs.25000 or Rs.30000.

 

CONCLUSION

 

It is quite clear that everyone needs to look at health insurance policy in addition to group insurance afforded by the company. This will award him with dual benefit which entail customized health plan with greater flexibility and at the same time give tax benefit also.




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