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Insurance Article

Get More Benefits with Health Insurance Apart From Saving Tax

January 29 2018
More Benefits with Health Insurance Apart From Saving Tax

A health insurance plan can act as a wealth saving tool and provide financial security against hefty healthcare expenses

Rishi, an IT professional working with a well-known multinational corporate company, bought a health insurance plan for himself and his family with the sole aim of reducing his taxable income. But little did he know at that time, was the pool of benefits offered by the health insurance policy.

Most people buy health insurance for the purpose of saving tax, like Rishi. A comprehensive health insurance plan for you and your family allows a deduction of ₹25,000 from your taxable income under Section 80(D) of the Income Tax Act, 1961. Furthermore, an additional deduction of ₹25,000 or ₹30,000 is available for paying health insurance premiums for your parents, thereby making maximum tax saving of ₹55,000 yearly.

But, the perks of a health insurance plan isn’t confined to tax benefits only. The gradually increasing cost of healthcare facilities in India is not a hidden fact. A single trip to hospital can wipe out all your savings. A health insurance policy acts as your financial security guard against emergency medical expenses. It provides a plethora of benefits apart from saving taxes.

No-Claim Bonus and Maximum Limit

A percentage of sum assured is added to the policy and the maximum limit of insurance cover is raised if no claim is made during the year. For example, if you buy a health insurance policy with a cover of ₹5 lakh, it can be raised to ₹10 lakh in five years if a company offers a no-claim bonus of 20% for every claim-free year.

Reduce Out Of Pocket Expenses

According to IRDAI, out-of-pocket expenses make up for about 62% of medical costs in India. Health insurance providers generally offer cashless transactions across a network of hospitals or reimbursement for non-network hospitals. It also covers medical expenses incurred during pre and post-hospitalization.

Timely Preventive Care

Prevention is always better than cure. Besides securing yourself financially against hefty hospital bills, health insurance policy also helps you with routine check-ups and timely preventive care across a network of affiliated hospitals and medical institutions.

Restoration Benefit

Certain health insurance plans enable automatic restoration of the sum insured when you exhaust your health insurance maximum limit. This benefit applies to unrelated illnesses. This feature is a boon if a person is hospitalized twice for different health related issues requiring huge treatment costs.

Related Article:

A Health Insurance Checklist
Lesser Known Facts about Tax Benefits on Health Insurance

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