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Is Health Insurance Non-taxable?

Learn about the tax exemptions and benefits for health insurance policies to get great health cover. To know more about health insurance, Visit Now!

  • 2,663 Views | Updated on: Mar 13, 2024

Imagine getting dual benefits with one insurance plan – lucrative, right? Availing health insurance provides this advantage. You get financial security in medical emergencies as well as tax benefits. But before deep-diving into the latter, let’s see what a health insurance plan is all about.

What is health insurance?

Health insurance covers the medical expenses the insured person incurs. You can enjoy this policy benefit for a fixed tenure against monthly, quarterly or annual premium payments. During this period, if a severe ailment or an accident occurs, the insurance provider will bear the expenses up to the sum insured. You can also enjoy add-on benefits, like critical illness cover and accidental death benefit, with health insurance policies for a nominal extra premium.

Is health insurance non-taxable in India?

The money you receive from your insurance provider after you raise a claim under your health plan amounts to compensation for expenses already incurred. Thus, it cannot be considered as profit or income. Hence, the claim amount for reimbursement of medical costs is not taxable in India.

Apart from this tax relief, if you buy a health insurance policy, you can claim tax benefits under Section 80D of the Income Tax Act, 1961. The table below shows the break-up of tax exemptions on health insurance:

Scenario Self, Spouse and Dependent Children Parents Total Deduction u/s 80D
When everyone is less than 60 years old Rs. 25,000 Rs. 25,000 Rs. 50,000
When you are less than 60 years of age and parents’ ages are 60 years or more (senior citizens) Rs. 25,000 Rs. 50,000 Rs. 75,000
When you and your parents are senior citizens Rs. 50,000 Rs. 50,000 Rs. 100,000

What happens in the case of Hindu Undivided Family (HUF)?

HUFs can claim tax deductions for health insurance policy premiums paid for its members. The limit is Rs. 25,000 if the primary policyholder is below 60 years. If the age of the policyholder is 60 or above, the eligible amount for deductions is Rs. 50,000.

Buying a Good Health Insurance Plan

While the tax benefits can reduce your income tax burden, it should not be the principal reason for buying health insurance. You should look for a health plan that covers your healthcare needs and fits your budget.

Kotak Health Shield offers financial cover against the diseases that are widespread these days and often require expensive treatments. It is a fixed benefit health insurance plan offering a set amount for the treatment of health conditions including:

  • Early or advanced stage cancers
  • Heart ailments
  • Liver diseases
  • Nervous system disorders
  • All such critical illnesses can be covered under the umbrella protection of this policy.You need not pay separate premiums for detached coverage-plans. Further benefits include:

    • Optional accident protection, offering extra payouts in case of death or disability due to accident, increasing your loved ones’ financial security against contingencies.
    • Provision to extend insurance coverage to the spouse.
    • You can also expand the coverage for a nominal rise in the premium with add-ons such as:

      • Daily Hospitalization Cash Benefit: It provides a fixed amount of money per day of hospitalisation, reducing your out-of-pocket medical spends.
      • Waiver of Premium when diagnosed with minor health conditions: Do not lose your health cover if you fail to premiums due to ill-health. The insurer bears the premium costs while you continue enjoying financial protection.
      • Income Benefits when diagnosed with major health conditions: Support your family with the extra income from this plan and access adequate medical care without worrying about the costs.

      Conclusion

      When it comes to health insurance, do not compromise with the coverage. Choose the plan that keeps your finances secure while you avail the best healthcare solutions when the need arises.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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