A health insurance policy protects you from unexpected and high medical expenses. Here are the top five reasons why medical insurance is extremely important.
Having a health insurance plan that protects you and your family during a medical emergency is crucial as healthcare is becoming costly, especially in the private sector. Hospitalisation expenses and modern treatment costs can drain your finances. The importance of a health insurance plan is undisputed. It includes several aspects of healthcare treatment and other expenses, which otherwise can burn a hole in your pocket. The medical insurance policy offers tax benefits which can help you save on taxes, along with a comprehensive health cover.
Here are five significant reasons why you should have a health insurance plan.
Protects savings: Reports highlight that Indians primarily depend on their savings when it comes to managing health emergencies. Having a medical insurance policy protects your finances from getting drained due to a medical emergency. With rising healthcare expenses, quality treatment can be very expensive. Without a health insurance plan, there can be a rapid loss of savings. But, with a comprehensive health cover, depending on the inclusions, majority of the expenses are covered.
Lifestyle changes: There is a massive change in the lifestyle of people. The tectonic change in our lifestyle has made us more prone to several health disorders. Hectic work schedules, commuting, quality of food, bad eating habits, and rising level of pollution have increased the risk of developing health issues.
Coverage provided: A medical insurance policy not only offers coverage against hospitalisation expenses, but also covers other medical expenses that one may incur during, before and after the course of treatment. These include diagnosis test fees, ambulance charges, doctor's consultation fees, room rent, pre and post-hospitalisation expenses, vaccination, daycare treatments, OPD expenses, evacuation, domiciliary hospitalisation, etc. A health insurance plan can cover these expenses, which otherwise you would have to pay from your pocket.
Quality medical treatment: Most of the health insurance plans offer cashless medical treatment, where you don’t have to pay for the hospital and medical bills. The insurance company will directly settle the bills with the treating hospital. They have a chain of network hospitals where you can get treatment without having to pay the medical bills. This helps you to avail quality medical treatment without having to worry about paying huge medical bills at the hospital.
Coverage for the entire family: Buying individual health insurance plan for each member of the family can be expensive. Therefore, health insurance companies offer family floater plans where you can cover your family under a single policy. In these plans, benefits are clubbed together for the entire family. Most family floater plans cover individual, spouse, children and parents. A family floater policy helps you to save on premium and also provides comprehensive coverage. These plans ensure that all types of healthcare treatments are covered.
How can I save on income tax payable from health insurance?
A Health insurance plan is a necessity that can also help you to save on taxes. Generally, you can save on income tax on health insurance premiums for a maximum of Rs. 1,00,000 in case you and your parents are above 60 years of age.
According to Section 80D of the Income Tax Act, 1961, a tax deduction of Rs. 25,000 can be claimed against the premium paid for health insurance plan including preventing medical check-up costs for yourself, children and spouse. Moreover, if you buy a medical insurance policy for parents, you can avail an additional tax deduction up to Rs. 50,000 from your taxable income if your parents are senior citizens. This way you can avail tax benefits up to Rs. 75,000 against premiums paid for a health insurance plan.
The amount of income tax benefit depends on the person who is medically insured. On the health insurance premium paid for self, spouse, children and parents, you can avail a tax deduction up to Rs. 25,000 in a financial year, provided the age of the insured is not above 60 years.
In case of premium paid by you towards health insurance policy for your parents who are senior citizens, you can avail tax deduction up to Rs. 50,000. Therefore, you get a maximum tax benefit to a total of Rs. 75,000 if your age is below 60 years while your parents are senior citizens.
If you are a taxpaying senior citizen and are also paying health insurance premium for your senior citizen parents, you are eligible to avail tax deduction up to Rs. 1 lakh in a financial year under Section 80D of the Income Tax Act, 1961.
|Scenario||Self, spouse, children||Parents||Deduction under Section 80D|
|Self and parents below 60 years of age||Rs. 25,000||Rs. 25,000||Rs. 50,000|
|Self and family below 60 years but parents above 60 years||Rs. 25,000||Rs. 50,000||Rs. 75,000|
|Self and parents above 60 years||Rs. 50,000||Rs. 50,000||Rs. 1,00,000||Members of HUF||Rs. 25,000||Rs. 25,000||Rs. 25,000|
|NRI||Rs. 25,000||Rs. 25,000||Rs. 25,000|
Every individual and Hindu Undivided Family (HUF) can claim a tax deduction for the premium paid towards medical insurance policy from their total income in any given year.
It is important to note that both “defined benefit” and “indemnity” health insurance plans would qualify for income tax benefit.
A health insurance plan provides people with much needed financial support at the time of medical emergencies.
There are several reasons to have a medical insurance policy in place. There is a common dilemma among people about the right age to buy health insurance. But there is no definite age to buy one. However, if you buy a health insurance plan at an early age, you will have to pay less. Premiums for your health insurance increases with age which is because of the associated health risk also increases. Health insurance premiums are determined by the age, city of resident, medical history, etc. Therefore, it is advised that you buy health insurance early as it will help you save on the premiums that you will pay.
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