Buy health insurance not just for saving tax; 5 basics you should know

By: | Published: July 11, 2016 12:00 PM

Health insurance plans help in meeting your financial goals with a tax saving process. Accidents and the exigencies can be easily covered with health insurance plans.

5 things about health insurance that you should knowHealth insurance plans help in meeting your financial goals with a tax saving process. Accidents and the exigencies can be easily covered with health insurance plans. (Photo: Reuters)

With healthcare sector facing increasing inflation day by day, you must invest in health insurance. Every year, medical inflation is rising in the 15-20 per cent range. In the future, costs are only going to rise. Your savings will be drained out immensely if you look at the pathology expenses or the room charges of private hospitals.

Moreover, with lack of exercise and consumption of fast foods, we are heading towards a future where most individuals will face health problems. Besides these, pollution and stress are also adding to the woes. Consumption of alcohol, smoking, diabetes and obesity can also lead to some serious health-related issues. The average age for various diseases has now come down to 30 years or even lower than that.

Health insurance plans help in meeting your financial goals with a tax saving process. Accidents and the exigencies can be easily covered with health insurance plans. It can provide a shield against the ever-increasing medical costs.

However, medical cover should be purchased for the right reasons. Your insurance should not only play as your tax-saving tool, but should cover you adequately during the hour of need.

Here are five things about health insurance that you should know.

Who can be covered? Insurance plans generally have two variants – individual health insurance policy and family floater policy. Individual plans can separately cover individual persons, while floater can act as a large umbrella for the entire family. Sometimes, you can even include senior dependents and your parents, in-laws within the same floater policy.

When to choose floater plan: Floater health insurance helps in preventing you from the hassles of maintaining separate insurance plans for separate persons. If required, you can also club the entire amount for the medical treatment of a single family member. When you have senior dependents in your family, you can select a plan specifically customised for them.

Dual Benefits: Health insurance plans serve dual objectives. Besides health cover, it can not only be used as a tax-saving tool. Under Income Tax Act of 1961, tax deduction has been increased to Rs 25,000 from the limit of Rs 15,000. Therefore, your health insurance plan can act as an effective tax saving tool, offering you with the deductions within your net taxable income. You can save tax up up to Rs 30,000 for the senior dependents.

What’s not tax deductible: However, when your employer or the government is paying the premium of your health insurance plan, it is generally not tax deductible in nature.

Covering critical illness: When you are investing in the health insurance, you are actually covering yourself from the critical diseases. Some unforeseen diseases can occur suddenly like a heart attack, mild stroke or any type of cancer. These kinds of diseases can be covered under critical illness coverage. The middle class families often exhaust out their entire savings just in a single critical disease of their family members. So it is better to keep yourself covered with the health insurance plans.

However, while buying a health cover, it is always advisable to choose a plan which has no sub limits for specific diseases or specific medical expenditure so that adverse situations can easily be avoided at the time of claims. Though it may be expensive, it can can cover a huge amount of financial risk.

Try to get insured at an early age so that you do not have to pay huge premiums. Also it will enable you to see through the waiting periods easily.

The author is Founder & CEO, PolicyX.com

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