The Importance of Health Insurance in Financial Planning

Over the last quarter of a century, the contribution of metabolic risk factors such as high blood pressure, sugar, cholesterol, and other related factors have doubled, according to recent research by the Public Health Foundation of India.

While the average lifespan of Indians maybe on the rise, our growing susceptibility to lifestyle diseases, especially amongst the youth is alarming. Simultaneously, the cost of healthcare has risen at a double-digit rate over the last decade – both in urban and rural India – according to the national survey on health conducted by the National Sample Survey Office (NSSO).

These factors highlight the significance of health insurance for prudent financial planning.

What Are The Health Factors That Affect Financial Planning?

There are a number of factors that heavily affect your pocket, regarding health. These should be considered before investing in a health insurance policy:

• Critical Illness
  Health-related emergencies often require immediate treatment that takes a heavy toll on your pocket. In addition, recovery in case of critical illness may come at a significant financial cost that could impact you and your dear ones.

• Long-term Care
  Diminished physical or mental abilities demand substantial assistance in terms of monetary investments. One must consider the care required and expenses incurred in case of a severe unexpected accident at any age.

• Permanent Disability
  In case of a partial or complete disability, the patient may have to face numerous expenses with the additional risk of income reduction.

Tax Benefits on Health Insurance in India

There are provisions wherein one can acquire exemptions on income tax. One such example is Section 80D of the Income Tax Act of 1961. One can get a tax deduction up to a maximum of ₹25,000 on the health insurance premium for themselves and their family. For the care of senior citizen parents, there is a separate limit of ₹30,000. This means that a total of up to ₹55,000 can be saved on taxes by investing in a health insurance plan.

Additionally, the General Insurance Council (GIC) stated that the premium collection for health insurance policies issued by standalone insurers in March 2016 was ₹624 crores, up 39% from the previous financial year.

Why Opt For a Personal Health Insurance over the One Offered By Your Employer?

According to the “Healthcare benefits in India: Changing Landscape” survey, almost 96% of companies provide medical coverage in some form to their employees with approximately 17% providing Post-Retirement Medical Benefits (PRMBs).

While your employer may offer medical insurance, it is always advisable to opt for a personal health cover. This enables you to choose a policy that is more customized to your requirements. You can avail of benefits depending on your health care needs.