After life insurance, health insurance is the second most valuable investment you can make in your life. It works in a simple manner, where you as a policyholder pay regular premiums to the insurance company and in return you are covered financially in case of any medical contingency.
However, there is more to health insurance than just covering the medical expenses of an individual. Just like life insurance, health insurance makes you eligible to avail tax benefits as per Section 80D of the Income Tax Act. Moreover, you can claim tax exemptions on the premiums paid not just for you and your family, but also for your parents’ health insurance plan.
Tax Benefits of Buying Health Insurance in India
1. As per Section 80D, you can avail tax benefits on premium paid for your parent’s health insurance irrespective of the fact that they are dependent on you or not.
2. The tax benefits component in a health insurance plan are two-fold - for premiums paid and for preventive health checkups.
3. However, the preventive health checkup component can be availed only if the premium paid in a year does not reach the maximum permissible tax exemption for the specific age group.
Let us look at age-wise tax exemption benefits with health insurance in India:
1. In case both you and your parents are under 60 years of age, you would get a combined tax exemption of Rs. 50,000 (Rs. 25,000 each for you and your parents). A maximum of Rs. 5000 can be availed for the preventive health checkup if the total premium paid doesn’t reach Rs. 50,000.
2. In case you are below 60 years of age, and your parents are senior citizens (60 years of age or above), you would get a total tax exemption of Rs. 75,000 (Rs. 25,000 for you and Rs. 50,000 for your parents). The Rs. 5000 preventive health checkup component can be availed as per the guidelines.
3. In case both you and your parents are 60 years of age or above, you can avail a total tax exemption of Rs. 1,00,000 (Rs. 50,000 each for you and your parents). The preventive health checkup limit is Rs. 7000 here, which can be availed as per the guidelines.
Let us try to understand the above cases in a tabular format below:
| Practical Scenario |
Tax Exemption on the premium paid |
Tax Relaxation on Preventive Health Check-up |
Maximum Permissible Tax Exemption |
|---|
| Both you and your parents are under 60 years of age |
Rs. 25,000 + Rs. 25,000 |
Rs. 5000 |
Rs. 50,000 |
| You are below 60 years of age, but your parents are senior citizens (60 years of age or above) |
Rs. 25,000 + Rs. 50,000 |
Rs. 5000 |
Rs. 75,000 |
| Both you and your parents are 60 years of age or above |
Rs. 50,000 + Rs. 50,000 |
Rs. 7000 |
Rs. 1,00,000 |
Other Benefits of Buying Health Insurance
Health insurance permits you to avail tax benefits, but its biggest benefit is protecting you financially during medical emergencies. Kotak Life’s comprehensive health insurance plan, the Kotak Health Shield, covers multiple illnesses and conditions related to Cancer, Cardiac, Liver, Neuro complications and also extends financial security against accidental death or disability. Moreover, it also allows the flexibility to extend coverage to your spouse.
Apart from that, you can avail other benefits like:
- Cashless Treatment: Avail cashless treatment at the vast network of cashless hospitals.
- Cost coverage for before/after hospitalisation: Get coverage for all the relevant pre and post-hospitalisation medical expenses.
- Transportation charges: Ambulance charges are covered under the Kotak Health Shield.
- No Claim Bonus (NCB): Enjoy a progressive NCB discount on the premium paid if you do not file for a claim in a policy term.
- Health Checkup: Get a preventive medical checkup with your health insurance.
Conclusion
Buying health insurance is not an investment but a shield that would protect you in case of unfortunate events. Always consider the coverage, benefits and the amount of premium before you purchase health insurance that would safeguard your life and also save you from paying taxes.
