With drastically changing lifestyles and annually rising medical costs, do not overlook life and health insurance policies which also help you maximise tax saving benefits. Over the last decade, with medical inflation having risen in double-digits annually, it is important to have adequate medical coverage because the cost of medical treatment without any health insurance policy may wipe out your savings completely. According to the 2017 ‘Cigna 360° Well-being Score – India Report’, a whopping 62 % of Indians burnt a hole in their pockets by paying for their own medical expenses.
It further underscored that Indians primarily depend on their own savings when it comes to funding health emergencies. Therefore, investing in a health insurance policy holds a dual objective. While you are rest assured of financial support in times of unforeseen medical and health-related exigencies, you also receive tax benefits on your net taxable income in the process.
Preventive health check-ups
While health insurance is a smart financial safety net for you and your family, there are also ways to ensure that you don’t end up unnecessarily paying higher premiums. The best way to save your premium outgo is by regularly doing preventive health check-ups. The preventive health check-ups is one way to ensure that you don’t end up spending lakhs for an illness. A health insurance policy allows you to avail tax deduction for any expenses incurred for preventive health check-up, however most people end up spending money for the check-up but miss out on claiming the tax benefits.
Based on expenses incurred, you can save on income tax for preventive health check-ups during the policy term. However, you need to keep in mind the following conditions for claiming this tax deductions:
You need to incur an expenditure on preventive health check-up in a particular financial year. It can only be for self, spouse, parents and dependent children. You cannot claim deductions for payment made on behalf of in-laws, siblings and children who are not financially dependent on you. Expenses can be in cash or in a mode other than cash. If all the above conditions are satisfied, the amount that will qualify for deduction is the amount spent in the financial year or Rs 5,000, whichever is less. This limit of Rs 5,000 is included within the overall limit of Rs 25,000 for mediclaim insurance premium. Unlike mediclaim insurance premium, there is no additional deduction in case a senior/super senior citizen undergoes the check-up.
While there is no requirement of submitting any document/receipt to the income tax department, it would be advisable to keep the same as proof as it may come in handy on a later date. There are many places where the preventive check-ups can be conducted and this need not be in the form of cheque payment and in such a situation this will not keep away the tax benefit. Last, but not the least, invest for yourself, stay healthy, save enough to indulge and buy what you desire. Invest smart and continuously learn about the nuances of investing. It is your money and you deserve the very best.
By: Sandeep Patel
The author is managing director & chief executive officer,
Cigna TTK Health Insurance