Health insurance is something that most of the people ignore today. People today just ignore having health insurance for several reasons. For example in India, health insurance is costly and it is not affordable for lower-middle-class people. But increasing healthcare costs make a big hole in your pocket. Paying for small health insurance premium can be the best way to lower your financial losses and gain peace of mind. We just cannot blame the people, it’s also the communication channel is not proper.
Things to remember before taking a Health Insurance
Health Insurance is a kind of indirect savings. If a person saves rupees 5000 in a month for 5 years, his Corpus would be Rs3.69 lakh after completion of 5 years if the rate of interest is 8% fixed. Now let us analyses general medical expenses in case of a disease if treatment is taken in medium kind of hospital. the list is given below-
|Types of disease||Approximate medical expenses|
|Dengue, Typhoid etc||50 to 60000|
|General hospitalization due to any reason||50 to 100000|
|Critical illness||10,00,000 and above|
By this way disease may erode complete savings done in previous years, causing the financial crisis, which impact may last whole life of a normal individual. the data shown above shows only actual expenses or hospitalization cost. There may be other expenses too. it is very important to check whether your health plan is compatible with all your health needs. Let us see what factors may influence our health and budget
- Normal illness
- Normal surgeries
- Critical illness and surgery due to critical illness
Health insurance policies
When we take an insurance policy we consider only normal illness we do not bother about others which are comparatively more expensive and lethal. so when we plan a health policy we should consider dissent sum assured with critical illness and accident riders or separate accident benefit policy. Nowadays there are top-up policies also available which comes in force, at once, once existing or base sum assured exhausted. These type of policies are very economical and one can take it from existing insurer or other company.
There is a different kind of policies in the market with different premium. We all know that nothing is free of cost this world. So if there is a policy of a lesser premium we should consider benefit offered with dearer policy. We should also check the claim settlement ratio. we should thoroughly read policy wordings and exclusions. Remember most of the critical illness and preexisting diseases will be covered after 3 years.
Take insurance policies earliest as possible–
One should take medical insurance as early as possible because insurance premium is low for a healthy individual. With increasing age, there are chances of disease. This disease maybe if excluded from future claims.In the worst case, there is a high chance of the decline in health insurance proposal.
Do not hide anything while filling proposal forms-
People accept insurance proposals only on ‘utmost good faith’. So proposer should inform everything in a transparent way. There should be disclosure of preexisting diseases and previous medical history if any. Previous medical history if any.
Most of the people working in private sector remain in a dilemma that whether they should take individual insurance policy or not because most of the employer provide medical insurance still their service tenure. Let me tell all such people that individual health planning is a must because after retirement only your individual health policy is going to benefit you in case of any medical need or emergency. Nowadays most of the companies are offering lifelong renewals. So once somebody has taken the health insurance policy, when he is fit, he is assured for lifelong renewal irrespective of future diseases.
Health policy Vs critical illness policy of life insurance companies-?
Health Insurance is a compensation policy. It compensates exact losses during cure of a disease. in contrast, life insurance policy is a benefits policy. It pays the full sum assured after diagnosis of a particular critical illness
Saving taxes through various benefits provided under section 80D of Income Tax Act
There are 5 important things to know about the tax benefit of health insurance plans.
- As per Section 80D of income tax act, you can avail the tax benefit on premium paid for the health insurance for your parents. The benefit is available irrespective of the fact that your parents are dependent on you or not.
- As per new amendment in budget 2018, you would be allowed to avail the tax deduction up to Rs 50,000(including preventive health checkups annually), based on the premium payment made by you for health insurance of your parents and they are senior citizens ( more than 60 years old)
- In case your age is 60 years or above and you pay the premium for a health insurance policy of yourself and any of your parents (who must be senior citizens too), you can avail tax exemption up to Rs 1,00,000.
- As per Income tax act, you can avail tax exemption up to maximum Rs.5000 for expenses such as preventive health checkups of you, your parents. Remember, this is not over and above the individual limits as explained above.You can incur this expense in cash also.
- In case you take medical treatment for your parents who are the super senior citizen, that is there age is 80 or above, then you are eligible to avail tax deduction up to maximum limit Rs 50,000.
Conditions to claim to get benefits of section 80D of income tax act
Individual or Hindu Undivided Family can claim deduction under section 80D. Corporate and firms are out of the scope of Section 80D. Further, the deduction is allowable only if the payment of insurance premium is in any mode other than cash. Other benefits of Health Insurance will include:
- No need to pay for your hospitalization – Cashless health insurance is available at networked hospitals of insurance companies.
- Allied benefits- Free consultation with doctors, discount coupons on health care services.
Other health-related deductions available under income tax act
- Section 80DD- An individual salaried person can claim deduction under this section. All expenses on treatment of disabled dependent are allowable for deduction. The expenditure includes medical treatment, training, rehabilitation of the dependent disability. The tax-deductible amount is Rs 75,000. For severe cases, the deduction allowed shall be Rs 1,25,000.
- Section 80DDB- The expenses incurred by an individual on the treatment of critical diseases (as given below) is tax deductible. A sum of Rs 40,000 is allowable as a deduction to those who are aged below 60 years. And Rs 1,00,000 for those who are above 60 years. This is as per budget 2019. Diseases covered under section 80DDB are Malignant cancers, Dementia, AIDS, Parkinson’s disease, hemophilia, thalassemia and chronic renal failure.
- Section 80U- If an individual himself is suffering from a disability, then he gets the flat deduction of Rs 75000/125000 u/s 80U depending on the normal or serious disability. In order to claim deduction under this section, one has to fulfill legal formalities like getting a certificate from a recognized medical authority.
In case you wanna know any further assistance about any health insurance plans, feel free to contact us https://www.moneydial.com/find-advisor/anadi-kumar-dubey-1680