The health of your wealth can only be defined by the measures you take to protect it. While leading an active and healthy lifestyle may go a long way in keeping your mind and body healthy, are you also keeping your wealth protected?
Why one needs health insurance
With rising medical inflation and discovery of new diseases such as novel Coronavirus, there is an impending risk to one’s savings. Yes, we are talking of medical exigencies which can have a heavy toll on your finances unless you have a health insurance policy to fall back upon. The good news is that the cost of hospitalisation due to Coronavirus is covered in the health insurance plans in India. A health insurance plan with adequate coverage is, therefore, a tool to hedge family members and self against any unforeseen medical expenses.
In today’s world of medical insurance, cashless hospitalisation and other new-age features, the health insurance companies are making available the right kind of policies as per the need of the buyer.
The benefits and what it costs
And, it all comes at a fraction of the cost. To ensure that hospital expenses, that can run into lakhs, are borne by the insurance company and not you, you need to pay only a small price in the form of premium to the health insurance company. During hospitalisation, a health insurance policy comes to the rescue as one gets the assurance of medical bills being settled by the insurer after having paid the premium.
Don’t just buy health insurance – understand important factors
However, before you buy a health insurance policy, make sure you make an informed buying decision. It’s important that you discuss the features and the way the health policy will work with your insurer. In addition, some key factors to look at will include looking at the inclusions and exclusions of the policy, Room rent or ICU per day limit etc. Further, there are certain waiting periods in all plans. Hence ensure you are aware of them.
Importantly, know about the claims settlement process from the insurer specifically if the claims will be settled in-house by the insurer or through a third-party administrator. Importantly, keep an eye on the sub-limits and co-payment clause in the policy, if there is any.
Have individual health cover
Now, you could say that you already have a group health insurance cover provided by your employer. It’s good to have that corporate health insurance but relying entirely on it is not advisable. The moment your employment stands terminated with your employer; your insurance cover stops too. Before you join a new employer, your family and you will be out of insurance cover and in the event of hospitalization, will be liable to pay all expenses.
Further, employers may change the terms and conditions of the group cover while renewing the contract with the insurance company. The new terms could be restrictive or carry inadequate coverage. It is, therefore, important to get adequate health insurance coverage for self and all family members and consider the group cover only as a top-up or additional cover.
Now, that we have seen why buying a health insurance plan is crucial, how it works, what it includes and what factors to consider while buying it, let us see if there are any tax benefits available in the plan for the buyer.
The premium that you pay to buy health insurance not only provides a sense of security but also helps in saving real money for you. This is because you can avail tax benefits on the premium paid towards medical insurance. Under Section 80D of the Income Tax Act, 1961, depending on the age of the individual, a tax advantage can be availed up to Rs 50,000 in each financial year. For those who are up to 60 years, the maximum tax benefit that can be availed is Rs 25,000 a year, while the upper limit of Rs 50,000 is for those individuals whose age is 60 years or more.
Thus, someone who is below 60 years and buys a health insurance policy for self, spouse, children and dependent parent (above age 60) can avail a deduction of up to 75,000 a year. Interestingly, if the individual is above 60 and buys the health insurance policy for self and parent, the maximum amount that can be availed as a deduction will be Rs 1 lakh.
Having purchased a health insurance policy is one thing while proactively taking steps to ensure good health is another. You can also avail tax benefit on the cost incurred for preventive health check-up for an amount up to Rs 5,000 within the limit allowed under Section 80D.
However, if you are wondering which type of health insurance policy will offer this tax benefit, here’s good news for you. There are various types of medical insurance policies and no matter which health insurance policy one buys, the tax benefit can be availed by the individual who pays for it. From individual health insurance policy to Family Floater to Critical Illness plans, the premium towards any of those plans qualifies for tax benefit under Section 80D.
How to buy
Now, as you are good to go, here’s how to own a health insurance policy. The premium that you have to pay will depend on several factors such as your age, sum insured (amount of coverage), type of health insurance plan, among others. It will also vary across health insurance companies. Therefore, what you need is a personalised quote based on your own parameters of age, amount of coverage etc.
Some medical insurance companies also offer online health insurance plans. Liberty General Insurance is one such prominent medical insurance company that not only helps you in calculating the premium, but also complete the online buying process entirely from the comfort of your office or home.
To Sum Up
Equipped with a medical insurance policy with adequate coverage, you don’t have to worry about breaking your investments, and keeping your tax liability low will be an added advantage. Security with tax savings can never be better than this!
(This article is sponsored by Liberty General Insurance)