Do you know the story about Varun? Smart, young man who was set to be married very soon. He had been saving up for his wedding for 2-3 years and had allocated budgets for big and small expenses. Two days before his wedding day, Varun’s father suffered a heart attack and was admitted to the hospital. All the money that Varun had saved for his wedding was now redirected towards the sudden medical expenses, since he never thought of investing in a health insurance policy. If only Varun had paid some attention and created a financial plan that would have funded his wedding and such medical emergencies.
On that note, one such important inclusion in your list of life goals should be investing in health insurance. You can divide your life goals into short-term and long-term when you pause for a few moments to indulge in financial planning. Financial planning is vital for you to secure a stable and safe future for yourself and for your loved ones. Sound financial planning includes various factors such as investing in health insurance, investing in mutual funds, etc. In today’s time and age, it is vital for everyone to have a health insurance policy. You never know when you will have to incur medical expenses. For this primary reason, you need to insure yourself and your loved ones with a suitable health insurance plan and include it as a vital step in financial planning for the future.
Importance of Health Insurance
Hospitalisation and surgeries can burn deep holes in your pockets and cause a dent in your hard-earned savings. All this can be avoided if you plan ahead of time and invest in health insurance. You will have to pay an annual premium, but it is worth it since this insurance will prove to be most useful during your hour of need. To promote and popularise the concept of investing in a health insurance policy, the insurance companies and the government offer many benefits. For instance, the government promotes health insurance by providing a deduction from income tax under Section 80D.
Investing in health insurance has to be a part of your financial plan to secure yours and your family’s future financially. Depending on your ability to pay the premium, family members to be included, pre-existing medical diseases and conditions and other factors, invest in the most suitable health insurance plan. While you are 18 years or younger, you are covered by your parents’ health insurance plan but as you grow to be financially independent, purchase your own health insurance - it does not have to be a full-scale plan but a basic coverage with a good insurance company can also be very useful in the short and long run.
The Absolute Requirement of Health Insurance During COVID-19
Life as we know it is highly uncertain. You never know what is going to happen. Most recent example? 2020 and the novel coronavirus , of course! The rapid rise and spread of COVID-19 has made us value our health and lives even more as well as reconsider the steps and measures we take to ensure our good health and well-being. The majority of the year has passed in tackling coronavirus, but the underlying feeling of uncertainty is not something that is going to disappear anytime soon.
During these unprecedented times, it is very important to have health insurance cover and quick access to quality healthcare to fight against COVID-19 . Even if you are taking all the necessary precautions to keep the virus at bay, you or a loved one can contract the virus and end up being hospitalised. For such scenarios, health insurance is a must since it offers the financial backup you need during such emergencies.
Things to Keep in Mind Before Investing in Health Insurance
- In order to avail tax benefits and deductions under Section 80D, make your premium payments in any other mode apart from cash.
- Premium paid for health insurance for your brother, sister, grandparents or any other relative cannot be claimed as a deduction for tax benefits.
- In the case the premium is being paid partly by you and partly by your parents, both of you can claim a deduction to the extent of each one’s contribution.
- You can pay the premium in cash, but in order to avail of the tax benefit, you should pay by Internet banking, cheque, draft or even by credit card. Cash payment for a preventive health check-up is eligible for the Section 80D benefit.
- Group Health Insurance premium provided by the company will not be eligible for deductions under Section 80D.
Factors to Consider While Investing in a Health Insurance Plan
There are a few things that you should keep in mind while you go ahead and purchase a health insurance policy. A few of those things are:
Coverage
The most important factor to consider while investing in health insurance is the coverage being provided at the cost that it is being charged at. Learn about the basic coverage and all the health issues it offers protection against. You will want to choose a health insurance plan that is worth the investment and benefits.
Benefits
When you invest in a health insurance policy, you will want to know and consider the many benefits that you get from it. Discounts, special offers, tax benefits, coverage, cashless hospitalisation, etc., are some of the benefits you should look for while investing in health insurance.
Eligibility
Another factor you must consider is the eligibility clause. What benefits are you eligible for? What can be claimed if you are paying premiums for your parents? What is the eligibility age for your children, spouse, siblings, and parents? etc.
Claims Process
When you buy a health insurance policy, you have to factor in the claims process. You will be making timely payments for the premium, but it is during the hour of need, and when you have to claim the insurance, everything matters the most. Find out about all the documents required for an insurance claim so that the whole process can take place in a quick and hassle-free manner.
Tax Benefits
Last but not least, you can avail tax benefits by investing in a health insurance policy. As per the Income Tax Act, there are different deductions under Section 80D that you are eligible for when you invest in health insurance for yourself and/or for your parents. You need to read the health insurance documents and find out what tax benefits are being provided under your policy. These benefits are provided under Section 80D.
Tax Benefits From Investing in Health Insurance That Will Blow Your Mind!
| Conditions | Tax Exemption - Premium | Tax Relaxation - Health Check Up | Total Deduction |
| You and your parents not yet 60 | ₹ 25,000 + ₹ 25,000 | ₹ 5,000 | ₹ 55,000 |
| You
are below 60, but your parents are 60+ (senior citizens can claim upto Rs. 7,000) | ₹ 25,000 + ₹ 50,000 | ₹ 5,000 | ₹ 80,000 |
| You and your parents are 60+ | ₹ 50,000 + ₹ 50,000 | ₹ 7,000 | ₹ 1,07,000 |
As senior citizens – you and/or your parents – can avail great tax benefits on health insurance as per Section 80D of the Income Tax Act!
Tax benefits under Section 80D are one of the added benefits that you stand to receive by buying a health insurance policy. Here are a few important things to note regarding tax benefits received by investing in health insurance.
- As per Section 80D of the Income Tax Act, you can avail of a tax benefit on the premium paid for your parents only if your parents are dependent on you.
- The Income Tax Law lets you avail tax exemption under 80D up to ₹ 5,000 for the expenses incurred for preventive health checkups of your parents who are less than 60 years. While it also lets you avail a tax exemption under 80D based on the premium you pay for the health insurance upto ₹ 50,000.
- You can avail the tax benefit up to ₹ 80,000 (includes preventive annual health checkups), based on the premium you pay for the health insurance of your parents aged 60 years or more while you are 60 years or below.
- In case you are 60 years or more and pay the premium for the health insurance policy for your parents (who are senior citizens too), you can avail a tax exemption under 80D for up to ₹ 107,000 (includes preventive annual health checkups).
Hence, It is Important to Remember...
There is no better time than now to start investing in health insurance. It acts as a safety blanket for you and your loved ones and comes with the added advantage of many tax exemptions and benefits. These exemptions and reimbursements make health insurance a feasible option for more people.
Conclusion
Health insurance provides financial protection, tax benefits, and peace of mind, making it an essential part of long-term financial planning. It protects your savings from unexpected medical costs and ensures timely access to quality treatment for you and your family.
If you are looking to purchase a health insurance plan to safeguard yourself and also avail the tax benefits that it brings, you should look at ManipalCigna ProHealth . This health insurance policy has all the requirements to help financially safeguard yourself and your family from any sort of health-related uncertainty.
FAQs
Why is health insurance important today?
Health insurance is important because medical costs continue to rise and unexpected illnesses can cause financial stress. A suitable policy provides coverage for hospitalisation, treatments, and emergency care, reducing the burden on your savings.
What factors should I check before buying health insurance?
Review coverage, exclusions, waiting periods, premiums, room rent limits, network hospitals, claim settlement ratio, and the availability of essential features like cashless treatment, restoration benefits, and lifelong renewability.
Are tax benefits available on all health insurance plans?
Tax benefits under Section 80D are available on premiums paid for health insurance for self, spouse, dependent children, and dependent parents. Benefits depend on the age of the insured and are subject to Income Tax Act provisions.
Does COVID-19 make health insurance mandatory?
Health insurance is not legally mandatory for individuals in India, but COVID-19 showed the importance of having financial protection for infectious diseases, hospitalisation costs, and emergency treatments.
How does the claims process work?
Claims can be made in two ways:Cashless claims — available at network hospitals where the insurer settles the bill directly.Reimbursement claims — you pay the bills, submit documents to the insurer, and receive reimbursement as per policy terms.
