Health insurance is an insurance product under which an insurance company provides coverage for the expenses incurred by an insured individual due to critical illness, hospitalization, accidents, surgery, and more. The whole idea behind taking a health insurance plan is to avail the convenience of cashless treatment and manage unexpected financial burdens. Usually, the company from which a person is buying a health insurance policy has tie-ups with the hospital. When a person gets admitted into one of these hospitals, they do not have to pay anything out of their pockets.
The cost of medical treatment is increasing at a significant rate. Be it hospitalization or treatment of critical illnesses or health check-ups; the prices are spiking. If you had to pay for healthcare from your own pocket, it may severely affect your finances and perhaps, exhaust all your savings. Hence, to stay covered during medical emergencies, having a critical health insurance policy is crucial.
How Health Insurance Helps Us Avail Tax Benefits?
Our tax rules enable us to save taxes by showing investment in mutual funds or shares, by furnishing the details of loan taken to buy a house, and others. Health insurance is another tax-saving investment that can help you avail tax benefits. So, one of the consequential benefits of health insurance, besides cashless treatment, is tax saving.
An insurer (individual or Hindu undivided family) having health insurance can avail tax benefit under Section 80D. Within this, deductions are available on the premium paid for the health insurance plan that includes a person’s spouse, children, and parents.
What is the Amount of Deductions That an Individual Can Claim?
Mentioned below are the deductions that an individual having a health insurance policy (that includes his/her family) can avail: -
- When an individual and their parents are below 60 years, a maximum deduction of 25,000 INR is available for self and family and 25,000 INR for parents. So, the total amount of deduction available under Section 80D, in this case, is 50,000 INR.
- If the individual and their family are below 60 years and parents are above 60 years, a maximum deduction of 25,000 INR is available for self and family and 50,000 INR for parents. So, the total amount of deduction, in this case, will be 75,000 INR.
- If the individual, their family, and parents all are above 60 years, the maximum deduction that can be availed is 50,000 INR for individual and family and 50,000 INR for parents. So, the total amount of deduction here will be 1,00,000 INR.
Point to remember:
- As an ‘insured person’, you should not make payment of the premium in cash. If you do that, you cannot avail of the tax benefits. Cheque, credit card, debit card, and internet banking, are some of the preferable payment modes.
- The policyholder can claim deductions for preventive health check-ups under Section 80D. The amount of deduction available is 5000 INR and is included within the limit of 25,000 INR/30,000 INR.
Now that you know that health insurance helps in reducing your tax burden, you should buy one that covers you, your family, and your parents while doubling up as a tax-saving investment.
Care Health Insurance (Formerly Religare Health Insurance) offers comprehensive health insurance plans and is associated with more than 7400 leading hospitals in India for cashless treatment. With industry-best claim settlement ratio of 93%, health insurance plans by CHIL provide thorough coverage.