Going beyond tax considerations

The government of India has made a provision for health insurance to be covered under Section 80 D of Income Tax Act. Health Insurance is one of the many well-known ways through which people can save taxes.

However, while doing so, the ‘insurance’ aspect of it gets completely side-tracked which ideally should assume utmost importance.

There are people who never see the need to invest in a personal health cover and wholly depended on the one provided by their employer.

In some cases, these employees would have their own personal health insurance policy too, but that policy may not be appropriate to their actual personal requirements. One should always take into account certain important aspects before going in for a health insurance while also making sure that it suits their tax saving purpose.

Primary reason

Tax exemption is one of the reasons why health insurance should be given due consideration, however, it is not be the primary reason, as protecting your family and your well-being should assume paramount importance.

Any health emergency can burn a huge hole in our pockets and investing in a good health insurance product with an adequate cover should no longer be optional. It is always advisable to choose a health insurance cover based on individual and family needs, and not for the sole intention of saving taxes.

Under Section 80 D of Income Tax Act, the tax breaks are offered for premiums up to a maximum of Rs 25,000 and Rs 30,000, if the insured is a senior citizen.

The total tax benefit that can be claimed if one is covering self, spouse, children and parents is up to Rs 55,000.

Hence, though it is wise to be apprised on all the tax benefits that one can avail; while taking health insurance, higher emphasis on its coverage benefits should be considered.
Another factor while taking health insurance cover is its wellness cover which helps you avail benefits of healthy lifestyle at a low cost.

This includes, discounts on gym memberships, health check-ups, vaccinations, yoga sessions, online chats with doctors and even second opinion from consultants. This will also curtail the utilisation of sum insured for hospitalisation which could be avoided with the help of wellness programmes.

Current stressful lifestyle not only adds to life style diseases, but also increases the frequency of hospitalisation and adds to medical inflation.

Such wellness products would definitely contribute in reduction in hospitalisation frequency and cost which will certainly help in controlling the constant hike in health insurance premium.

However, one should also keep in mind that there are areas which cannot be shown as tax exemption.

Following is the checklist which can help you avail of the tax benefits.
 You can claim tax benefits for self, spouse, dependent parents and children. You cannot claim tax benefit on health insurance premium paid for your in-laws  Only cheque/ECS/Bank transfer/Internet Banking/ DD payments are allowed. Cash payment will not be considered.

 Proof of payment of premium has to be furnished, in order to avail the tax benefit
So when making investment decisions, make a smart choice by buying health insurance that suits your health requirement in the long run, rather than just fulfilling an amount for tax purposes. Be wise and invest in your health.

(The author is President-Insurance of TataAIG General Insurance)