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BW Businessworld

Super Investment For Tax Saving: Health Insurance And Its Benefits Beyond

You can take a look at the image for the estimated costs for cancer treatment, which will only continue to rise over the next few years. It would help if you protected yourself with comprehensive health insurance.

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It is that time of the year when the corporate sector is buzzing with filing taxes, understanding its investments, looking at different avenues for getting a rebate, etc. Some planned for it, some regret not planning for it and some are thinking of ways to make up for it in the next three months. With the budget announcement focusing on the optional new tax module for next year, a lot of speculations are going on, on whether to take up the new tax without exemptions or continue with the investments and exemption under the old tax module. 

For this year, however, individual tax payers need to look for last-minute investment instruments as they may affect the take-home pay at the end of the financial year. In this ‘taxing time’, one relief for the procrastinating investor is the ease of investing online. It has made the investment process less tedious and more trackable, broadening the horizons of tax-planning. 

Many instruments can be chosen for saving tax, including five-year and above fixed deposits, PPF, insurance policies, Mutual Funds, ULIPs, etc. Each can be purchased online at the click of a button. However, it is paramount to choose the right investment as it is not only affecting your taxes but will also look at protecting you financially. 

Health insurance, in particular, is a solid investment choice for investors. Health insurance falls under the section 80D, the maximum deduction you can get on your taxable income under section 80D can be Rs 1,00,000 in case you buy Health insurance for yourself or your parents and both you and your parents are senior citizens. A comprehensive health insurance plan helps you save tax but has so many more advantages in the long run. 

You can take a look at the image for the estimated costs for cancer treatment, which will only continue to rise over the next few years.  It would help if you protected yourself with comprehensive health insurance.

Some of the top benefits include: 

  1. Spending thousands instead of lakhs: Imagine saving for 10 years for an emergency and accumulating Rs 10 Lakh. But you fall critically ill at the end of 10 years and end up spending all that money at one go and still fall short of money for your treatment! The point of buying insurance is to protect yourself from the expenses that arise from unexpected hospitalisation or meeting with an accident and let your savings be savings. Also, the amount you would invest in health insurance premium would be negligible in front of the coverage you’ll be getting for all those 10 years! 
  2. Inflation: With the rising costs and slowdown of the economy, the prices of different medical treatments will see inflation in the next few years. When we plan for saving, we only consider the current estimate of medical costs we might incur. Insurance can protect us from the unexpectedly high costs of treatment, without adding to the pressure of putting together money for the final hospital bill. 
  3. Lower Premiums and Waiting Period: When you buy health insurance at a young age, the chances of contracting diseases are slim. It will result in reduced premiums and less cost for insurance.  Usually, there is a waiting period of 30-90 days for the policy to come into effect, even in case of medical emergencies. It is a big advantage if the policy is taken at a young & healthy age as the waiting period can exhaust without incident. 
  4. Better Coverage: When taking a health insurance package at a young age, the chances of getting add-ons are better, since the risk is lower for the insurance company. It will also help in getting coverage for OPD and other procedures that are not usually covered in a comprehensive policy. 
  5. Lower Rejection Chances: Some of the time, health insurance coverage is denied for high- risk individuals buying a policy with increasing age. Since you will be looking at buying a policy between 25 -30 years of age, the chances of your policy getting rejected come down drastically. 

So, while you are thinking of different tax-saving instruments and deciding whether to buy health insurance or not, keep in mind the numerous benefits you will get with a one-time investment in the year. This should help you choose the best health plan for your investment requirement, without sacrificing what is good for you.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Vivek Chaturvedi

The author is Head of Marketing, Digit Insurance

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