How to Fight the Burden of Taxes with Health Insurance
Tax saving is also an art and plays a key role in the financial planning of an individual. Not many people know, but health insurance is also an effective tax-saving tool.
Want to learn more? Read on this article to learn how to fight with the burden of taxes with health insurance.
What is Health Insurance?
It is a type of insurance cover that covers an individual’s medical and surgical expenses. In such a case, either the insured pays costs out of their own pockets and then the same is reimbursed, or the insurer directly makes payments to the healthcare provider who is on their network list of hospitals.
A health care provider could be a medical institution like a hospital, clinic, physician and pharmacy. The insured here would be the owner of the policy.
Significance of Health Insurance
With the growing medical inflation, which by the way, is higher than inflation in food, fuel, clothing, etc. An individual is bound to be scared of falling ill in the first place. But, falling ill or a disease hitting you cannot be controlled, and managing funds at that urgent hour would prove to be a daunting task.
This is where health insurance comes to save the day. It offers considerable flexibility in terms of disease or ailment coverage. There are certain health insurance plans which cover over 30 critical illnesses and more than 70 surgical procedures. This way, you are secured both health-wise and money-wise as well.
Benefits of investing in a health insurance policy
Mentioned below are some key benefits of investing in a health insurance policy:;
- It is a fantastic investment option
- It safeguards you in the event of a medical emergency
- There are other benefits in being covered with health insurance viz; cashless hospitalisation, domiciliary treatment expense, tax benefits etc.
Renew Your Health Insurance Timely
Just as there is a huge positive side to healthcare insurance, similarly renewing it on time also has its benefits. There is a certain amount of grace period, in this case 15 days, after which the policy lapses. Also, many folks also feel they need to keep paying the same premium and there is no major difference in buying a new and renewing an old policy, but there is a huge difference.
- If the waiting period for a particular medical condition is 2 years, then post renewal after the first year, the waiting period will only remain for one year.
- If the policyholder purchases the plan again after his former policy has lapsed, the waiting period again becomes 2 years.
- There is also a ‘No-Claim Bonus’ accumulated if one has not made use of their policy in the past, which serves as an incentive for the policyholder.
- Renewal of the plan also enhances the medical coverage to a certain extent
It is very important that you renew your policy before the expiry date. If you let it lapse, you will lose your hard earned benefits and No Claim Bonus as well.
Tax Shield benefits
Thereare certain tax shield benefits, viz;
- The magnitude of the tax benefit of the health insurance depends on the age of individual and family members who are insured. For senior citizen, the upper limit is INR 30,000 and for other members below 60 years it is INR 25,000.
- Tax benefits can be availed for any health check-ups done during a year for up to INR 5,000. This means that if you pay a premium of INR 20,000 and undergo a health check-up of INR 5,000, then a sum of INR 25,000 will be eligible for tax.
- In order to avail tax benefit, the Income Tax act states that the premium is to be paid in any mode except cash like credit card, debit card, net banking etc.
- No tax deduction can be claimed for health insurance of in laws, though for parents and spouse, tax exemption can be applied
- The total payable premium of the health insurance coverage with a deduction of prevalent service charges is the total tax deduction from your total income. Any preventive health check-up expenses up to INR 5,000 can be added to the exiting premium and tax deduction can be availed.
- If one pays for insurance on their sibling’s behalf, one cannot claim for tax deductions on health insurance. However, one can avail tax deductions in the case of serious medical disabilities and expenses arising due to the treatment of dependent siblings, under Section 80D of the Income Tax Act.
- Children over 18 years of age or employed cannot come under the coverage shield. Only children under 25 years of age and unemployed are eligible for the cover.
- The insured can claim for deductions on mediclaim policies provided by his employer and for the policies taken independently by him.
You surely can minimize the burden of taxes by opting for a health insurance policy suited for you and your family. So, what are you waiting for? Buy a health insurance policy to save up on taxes! You can also long on to Covrefox.com and have a plethora of health insurance policies at the tips of your fingers, and select the one most suitable to your requirments.