It is that time of the year again: you have to reach for the calculator and determine your tax liability.
Taxation is an important part of financial planning, and you need to figure out how to lower your dues effectively and legitimately. One of the best ways to reduce your tax liability is to invest in a family health insurance plan that offers tax exemptions. Such a plan will also keep you financially covered during medical emergencies—especially in this difficult period as we all navigate Coronavirus.
The good news is that with the nation-wide lockdown still in force, the Ministry of Finance, Government of India has extended the deadline for making tax-saving investments till 30th June, 2020.
With inflation and medical costs rising in India, health cover has become as important an investment as any. Below are a few points to demonstrate how it can help you in effective financial planning.
Tax benefits
When you are planning to invest in health cover, the first thing you should do is compare health insurance policies to determine the benefits that each insurer offers.
Under Section 80D of the Income Tax Act, 1961, a policyholder can claim a tax deduction up to INR 25,000 on the premium paid for self, children, and spouse. You can avail of an additional tax deduction up to INR 50,000 if you buy health cover for any of your parents who are over 60 years of age.
Protection during health emergencies
Planning your finances requires you to prepare yourself for emergencies, too. For example, a medical emergency can create a huge dent in your savings. However, when you have mediclaim, your insurer will pay for the medical bills on your behalf so you need not worry about the sudden healthcare costs that may derail your plans.
How much health insurance you need
The amount of cover you need from your medical insurance plans for family depends on various aspects, which include:
- Premium
If you are looking for an insurance plan with a high sum insured and additional benefits, you need to pay higher premiums. So, the amount of cover you can get depends largely on how much premium you can afford. You should also note that the premium payable increases with age.
- Annual income
When providing the policy, the insurer always takes into account your annual income. This determines the maximum cover you can avail of.
- Family history
If there is a history of a particular illness in your family, you are at a higher risk of developing it. For this reason, getting comprehensive health cover is very important. It ensures that you will be financially secure if you ever develop that illness.
- Type of hospital
Depending on where you are hospitalized, the cost can vary. Treatment at high-graded hospitals are expensive and demand higher health cover to be affordable.
Once you decide how much cover you want, do some research and choose a health insurance policy that suits your needs the best.