Multiply Your Benefits With Multi-Year Health Insurance Policy

When you consider opting for insurance, it should not come with the expectation of returns on your investment. Instead, it should be with the intention of shielding your savings for the times of unexpected events. One can say that it is more of a necessity than an option in today’s world; especially considering the fact that the stress and cost of medical treatment are constantly increasing to a great extent. Keeping health insurance in hand saves you from unexpected blows to your budget as it protects you during mishaps.

Lack of awareness makes some people sceptical about investing in a health insurance policy, as it does not offer them any return. However, it can save you during your worst possible day. Hence, it is imperative that every individual includes it in their financial plan.

Furthermore, buying a health insurance plan will help you in tax saving under section 80D.

How does it provide tax benefits?

Saving taxes becomes an important concern for every professional who falls in the tax slab. It can be a crucial part of your financial plan as it reduces your tax amount significantly.

Under Section 80D of the Indian Income Tax Act, you can avail tax benefits with the help of your health insurance. This can be done by claiming tax benefits on health insurance premium for that particular year when filing your annual income tax form.

Just like Section 80D, there are other sections such as Section 80C—this is yet another tax-saving option that an individual can gain a tax benefit from. However, Section 80D is solely for health insurance policies, where you can save your tax on the health insurance for your whole family or dependents.

It is important to understand that this does not include the health insurance premium that you have paid for your in-laws. Your spouse, however, can save their tax on the premium of their parent’s health insurance.

What are the benefits of deductions with respect to Section 80D?
The following table can help you understand the tax deductions that apply to you under Section 80D. Please note that it is as per the financial year 2019-2020.

Age Group	Deductions Up to	Total Deductions
All insurance people under 60	Rs. 25000 for self, spouse, or children and Rs. 25000 for parents	Rs. 50000
Self, spouse, or children are under 60 and Parent or Parents above 60	Rs. 25000 for self, spouse, or children and Rs. 50000 for parents	Rs. 75000
Self, spouse, or children and Parents are above 60	Rs. 50000 for self, spouse, or children and Rs. 50000 for parents	Rs. 100000

Note that, by preventing health check-up, you can avail tax benefits of up to Rs. 5000—this is inclusive of the overall tax deductions.

How can we benefit from a multi-year policy?
Now that you are aware you can avail tax-benefits from health insurance policy, it is even more beneficial if you invest in a policy that spans over more than one year. This ensures that the premium amount remains fixed throughout the years of your multi-year health insurance plan—a huge saviour in case of a price hike!

All you need to pay is a one-time large sum of premium for your multi-year policy upfront. Hence, it is important that you give it a thought before you choose such a long-term plan.

However, when it comes to your tax deductions, you need not worry about your policy being effective for just the first year of your health insurance plan. You can choose to claim it year by year. For example, if you have paid Rs. 50000 for a five-year policy, the amount of tax deduction you can avail per year will be Rs. 10000.

Remember

Pay the premium through any mode of payment other than cash in order to claim tax benefits on your health insurance policy. Some of the popular modes of payment are debit card, cheque and net banking.

To sum it up

Health insurance does not just save you during tough times, but it also safeguards your savings. Hence, this tax-saver should not be ignored. Be sure to consult your health insurance company or an insurance advisor like Policyx.Com to know the exact amount of tax deductions you can benefit from your health insurance policy.