Health insurance is an essential aspect of financial planning that takes care of individual’s medical expenses and ensures their long-term well-being. It enables you and your families to manage the often-high costs of medical treatment in case of an emergency or otherwise.
Likewise, Term Life Insurance is another important financial tool for ensuring a stable and comfortable life for you and your loved ones. It provides several financial benefits to the policy holder’s family and help them secure a safe future on untimely demise.
Against the back-drop of global pandemic, Health Insurance and Term Life Insurance have assumed significant importance and it is strongly recommended to have an appropriate coverage of both the plans for you and your family.
Key Benefits
• Health Insurance provides financial security on account of health-related costs, including minor illnesses, injuries, hospitalisation and critical diseases.
• Term Life Insurance provides essential financial protection for loved ones, ensuring their well-being in case of an unfortunate passing of the policyholder and safeguarding against unforeseen events.
• Insurance premiums are tax-deductible, allowing you to claim them as deductions in your income tax returns.
Outlining tax benefits of Health Insurance (Section 80D).#
• A policy holder of Health Insurance can claim tax deduction (₹ 25,000 – ₹ 1 lakh) against medical insurance premium paid for Self, Spouse, Children and Parents.
• Such deduction will depend on the age of individual and family members covered under the policy. The below table provides a quick snapshot of maximum tax deductions for Health Insurance Premium payments by individuals:
Amount in ₹
| Deductions | Individual < 60 years | Individual > 60 years |
|---|---|---|
| I. Maximum Available Deduction Self, spouse and dependent children* |
₹ 25,000 | ₹ 50,000 |
| II. Additional Deduction • Parents below age of 60 • Parents above age of 60** |
₹ 25,000 ₹ 50,000 |
N.A. ₹ 50,000 |
*(Including preventive health-check-up deduction up to ₹ 5000)
**The above limits apply for Medical Expenditure incurred for Self or family members or parents, all being senior citizens.
• The deduction can be claimed either in respect of health insurance premium or medical expenditure (for senior citizen only)
Important points to remember:
• The premium amount should be paid through prescribed mode like NEFT, RTGS, UPI, Account payee Cheque etc.
• Preventive Health Check-up – Any payment mode is acceptable.
• Health insurance policy documents including renewal and copy of premium receipts should be preserved.
Outlining tax benefits of Term Insurance (Section 80C).#
• You can earn a tax deduction of up to ₹ 1,50,000 for premiums paid on life insurance policies covering Self, Spouse and Child.
• In the event of an unforeseen death, proceeds from the Term Life Policy are tax-free in the hands of beneficiary u/s 10(10D), subject to fulfilment of applicable legal conditions.
Conclusion
If you care for yourself and your family’s well-being, it is strongly recommended to opt for the tax friendly Health and Term Insurance plan to secure your family’s future.
# The above tax benefits are as per the Income tax Act, 1961 read with the Rules. The said deductions shall not be available for individuals opting for new tax regime.