This is that time of the year when most of you must
be busy in exploring investment options to get the maximum tax benefits. After
exhausting the limit of Section 80C, people are looking at Section 80D i.e., health
insurance to save tax. The premium paid towards health insurance can be availed
as a deduction up to Rs 25,000, from the total income under section 80D of the Income
Tax of India. The deduction is available with respect to premiums paid for
self, spouse, and children. For parents, an additional Rs 30,000 is allowed as
deduction if your parents are senior citizen, if they are not senior citizens
yet, then Rs 25,000 deduction is allowed.
But, should one ‘invest’ in a health insurance
policy to save tax?
Current Scenario
Given the importance of health or mediclaim insurance, India is still lagging on the health insurance penetration.
This is because people are still unaware of the benefits and importance of
having a health insurance policy. Around, 80% of the people in India are not covered under any health insurance plan.
Also, out of 20% of the people who have a health
cover, they consider it as a tax-saving instrument only. They ‘invest’ their
money in health insurance so that they can save some tax at the end of the financial
year.
Most of the people do not even consider buying a
right amount of cover, and end up buying a lower insurance coverage. Such
practice defeats the entire purpose of buying the insurance.
Objective of a health
insurance:
The main purpose of any insurance product is to
offer protection against any financial risk. Health
insurance basically helps you
financially in case of medical emergency. It makes sure that you and your family
gets best medical care in case of any health-related issue without incurring any
financial debt. You might not get the benefits of a health insurance
immediately, but you will understand its importance, if God forbid, you require
medical care.
Why do you need a
health insurance?
Health insurance has become essential for
everyone these days due to the following reasons:
·
Rising medical inflation: As per an insurance portal, the cost of medical treatment has
increased by almost 50% in the last five years with the per capita income just
increased by 25%. So, it means, you need to spend more money on hospitalisation
and treatment than before.
·
Increasing life expectancy: The average life expectancy in India has increased to 67 years from
62 years in the recent years. It means, people may require medical treatment
for a longer duration in their lives.
·
Lifestyle diseases: Indians are witnessing more of lifestyle
diseases these days due to a shift in daily life. The increased stress level,
junk food, long working hours, etc. all these are giving rise to health issues among
people these days.
Hence, health insurance is a must buy instrument
to get excellent medical treatment without worrying about the expenses.
Conclusion:
There is always a pressure to get the tax-saving
components by the end of the financial year and there is no doubt that health
insurance is a very popular tax saving instrument. But, one should not forget that the purpose of
a health insurance policy is far wider than just tax saving. It is meant to
provide financial security in case you and your family needs any medical help.
So, instead of buying lower health insurance coverage to get tax benefits, make
sure to protect you and your family with sufficient coverage. Every health
insurance plan has its distinctive feature and therefore, it is necessary to
make a suitable comparison.
Consider whether you should go for a family
floater or an individual plan for each member of your family or whether you should
have a specific critical illness cover to get protection against ailments like
cancer, kidney failure, heart attack, etc. Remember, choosing an adequate sum
insured is imperative. Under-coverage is as bad as no insurance at all, since
you might have to undergo financial stress if your policy doesn’t offer you
complete coverage when the need arises.
The lure of tax benefits and the hurry,
especially during this time of the year, can push you to take some unwanted
decisions. Without comparing, you may choose the policy just to save tax.
However, I would advise you to do a proper comparison and choose the best health insurance policy that comes with benefits like, strong network hospital,
wider coverage, etc. Consider tax benefits only as a topping on your health
insurance plan!
Author: Swaraj S
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