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How Does an Insurance Policy Helps in Income Tax Savings?

Medical expenses are increasing day by day and so are the premium of the insurance policies that provide coverage against them. Due to this, the government always recommends buying a health insurance policy that also provides tax benefits under Section 80D. Care Insurance Company with a large chain of hospital network, cashless claim, and 24×7 claim support provides a variety of options.

What is Section 80D under Income Tax?

An individual can claim an income tax deduction from their income against any health insurance policy in a given year. The tax benefits can be availed for an individual, dependent children, spouse, and parents.

Tax Benefits of Medical Insurance under Section 80D:

The medical insurance tax benefits you receive will depend upon the amount deducted from your income in a particular year. The amount deducted will depend upon various conditions, such as:

  1. If the individual and family are below 60 and parents are above 60 years:

If you pay for the premium of the health insurance and you are below 60 and your parents are senior citizens, whether your parents are dependent on you or not, the tax deduction will be as follows:

Premium paid for self, spouse and children Premium paid for parents Tax Deduction
Rs. 25,000 Rs. 50,000 Rs. 75,000
  1. If both individual and parents are below 60 years:
Premium paid for self, spouse and children Premium paid for parents Tax Deduction
Rs. 25,000 Rs. 25,000 Rs. 50,000
  1. If both individual and parents are above 60 years:
Premium paid for self, spouse and children Premium paid for parents Tax Deduction
Rs. 50,000 Rs. 50,000 Rs. 1,00,000

For example: If a person below 60 years, buys a health insurance plan for his spouse for Rs.15,000 and an insurance plan with a premium of Rs.20,000 for his father, the total tax deducted will be the sum of both premiums which is Rs.35,000.

Things to Remember while Buying a Health Insurance Plan:

  • The health insurance policy should be availed by taking various needs and requirements of you and your family.
  • It should always be bought from a well-established insurance company with a high CSR (claim settlement ratio) and a large hospital network.
  • While buying a health insurance policy, nothing should be done in a hurry, as you might not be able to understand all the aspects of that particular policy.
  • Your medical insurance policy should have a low waiting period, as the policies with a high waiting period may not be much beneficial for your medical expenses during that time.
  • If an individual is financially stable, then he should opt for a health insurance policy with a no co-pay clause in it.

A person must always remember that opting for health insurance policy should not be considered as a method of tax saving but for protecting yourself and your family members, during emergencies, or any other critical illness which might have occurred due to medical history in your family.

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