Health insurance has gained popularity as a tax saving option over the last few years, with the additional tax sops offered by the government in the previous year’s union budget. Under The Income Tax Act Section 80D, health insurance premiums that are paid for oneself, the spouse and dependent children are tax deductible up to Rs. 25,000.
With the financial year coming to close, people usually invest in tax saving products, albeit in haste, to save taxes while filing their tax returns. Health insurance has gained popularity as a tax saving option over the last few years, with the additional tax sops offered by the government in the previous year’s union budget. Under The Income Tax Act Section 80D, health insurance premiums that are paid for oneself, the spouse and dependent children are tax deductible up to Rs. 25,000. In case of senior citizens, the insurance premium deduction amount is Rs. 30,000.
A person can also claim tax deduction for premium paid for parents up to Rs. 25,000. If the parents are senior citizens (60 years and above), then the maximum deduction allowed is Rs. 30,000. Research reveals that people purchase policies at this time of the year, without rendering necessary time and effort to evaluate their decision against their future needs. Although the tax deductions do bring some respite to the customers but one should be mindful while buying a health insurance policy.
In order to ensure that a person secures the right health insurance policy, we would suggest that he or she begins the review process early to have ample time to make appropriate decisions. First and foremost, one must scan the marketplace for what kind of health insurance policies are available, in order to understand what he or she may need. With a large range of plans available in the market today, it has become a tad difficult to select the most suitable health plan to fulfill one’s requirements.
It is imperative to understand what the exclusions and inclusions are on offer by each insurer, as there are restrictions on what is covered and what is not covered under every policy in the marketplace.
One must ensure an adequate coverage keeping in mind the age bracket, age of family members’, their current health status, health care inflation, etc. A person in the middle to young age group should have an indemnity cover of at least Rs. 3-5 lakhs. In case of a married individual, it would be wise to choose a family floater plan of Rs. 5-7.5 lakhs sum insured, covering an individual and the spouse.
Once a few policies have been narrowed down, a person must read the policy terms and conditions to reduce the chances of misunderstandings that could come up in the future. A person should also understand the kind of network hospital coverage an insurer offers, in order to ensure expansive coverage across the country.
It is always advisable to choose a health insurance plan that has no disease specific or expenditure specific sub-limits to avoid situations at the time of claims. This may be marginally expensive in some cases, but one can hedge larger financial risk and have freedom for efficient treatment at the best healthcare provider.
Depending on one’s health condition, a person must also factor in various add ons, such as critical illness, top up plans, etc. While making the final purchase choice, one can also consider buying health insurance for a multi-year period as this can entail lower premiums.
One last piece of advice would be for one to get insured at an early age. Health risks increase with growing age and to be applicable for the pre-existing disease coverage, you would need to spend at least three years as a waiting period. Hence, it is advisable to opt for an adequate health cover at an early age. An early start to a health insurance cover would ensure the completion of waiting periods when you may need it the most, following which you can enjoy the full benefits of your health insurance plan. At this stage you would be able to hedge a larger financial risk for efficient treatment at the best healthcare provider.