jaskaran2010
New Member
- 1
Are we Buying Health Insurance Merely for Tax Planning?Think Again.
If we talk to a group of 5 people , on why they wanted to take a health insurance 3 out of 5 will give you a plane reply i.e Tax exemption u/s 80 D.This statement dulls the real essence & Need of Health Insurance in our society.
Why Health Insurance:-
Question to this answer is why not , Following are the reasons why one must take health Insurance:-
1.To safeguard our hard earned income in case of medical emergencies.
2.To fight medical inflation as cost of medical procedures is increasing day by day.The following graph will show you the real difference.
3. Tax exemption under 80D.
Now let's discuss every statement Individually in detail.
To Safeguard our Hard Earned income in case of Medical Emergencies:-
lets take an example Mr. Mahesh (35) is a very cautious investor. He has a son (5) for whom he is planning to send him to foreign for higher studies , So he invested a handsome money in life insurance endowment plan.Along with that he is a market savvy investor wherein he invested in mutual funds also for guaranteed returns he puts up his money in to debt too(fixed deposits & NPS), This clearly shows a healthy portfolio of investment and very clever move too. But he missed a very important component of Financial Planning which is Health Insurance.
Suddenly he diagnosed with Critical Illness where an CABG operation costs him 5 lakh (INR), So what option does he have in order to pay for the expenses
He has to take money from savings.
He has to break his Investments.
Take Loan.
Sell out Assets.
Above mentioned 4 options Clearly are the once one is not willing to opt. but the scenario would have been different if he has taken a health Insurance policy of proper coverage.which safeguards the hard earned Money income of Mr, Mahesh in case of Medical Emergencies.
Medical Inflation:-
What is Medical Inflation, For a layman Medical inflation is the increasing cost of Medical Treatments & facilities. the question is how they are directly linked to buying a Health insurance Plan.
This will be more clear with the statistics
This chart clearly shows the skyrocketing increase in the medical cost in rural as well as Urban sector.
The cost of Medical Treatment of very common critical Illness CABG(Coronary Artery By Pass Graft) in the year 2006 was around 2-3 lakhs average which is around 7-8 lakhs in average during the year 2015.
show this clearly shows how this cost impacts our pockets and to have a Health Insurance with proper coverage will help us to get rid of such a situation.
Tax deduction of Health Insurance Premium (Section 80d)
Health insurance premium paid for Self, Spouse or dependent children is tax deductible upto Rs 25,000. Earlier the limit was Rs 15,000 and this limit has been increased to Rs 25,000 in Budget 2015-2016. If any one of the persons specified is a senior citizen and Mediclaim Insurance premium is paid for such senior citizen then the deduction amount now is Rs. 30,000. From Financial Year 2015-2016, this limit is increased to Rs 30,000 from Rs 20,000 (applicable in FY 2014-2015).
Health Insurance premium paid for parents is tax deductible up to Rs 25,000. If your parents are senior citizens (60 years and above) then the maximum allowable deduction is Rs 30,000.
Below table shows you the quantum of tax deductions applicable on health insurance premiums.
Nutshell
Dont buy Health Insurance just for the sake of Tax planning as it has much more to offer.
Regards
Jitender Singh
If we talk to a group of 5 people , on why they wanted to take a health insurance 3 out of 5 will give you a plane reply i.e Tax exemption u/s 80 D.This statement dulls the real essence & Need of Health Insurance in our society.
Why Health Insurance:-
Question to this answer is why not , Following are the reasons why one must take health Insurance:-
1.To safeguard our hard earned income in case of medical emergencies.
2.To fight medical inflation as cost of medical procedures is increasing day by day.The following graph will show you the real difference.
3. Tax exemption under 80D.
Now let's discuss every statement Individually in detail.
To Safeguard our Hard Earned income in case of Medical Emergencies:-
lets take an example Mr. Mahesh (35) is a very cautious investor. He has a son (5) for whom he is planning to send him to foreign for higher studies , So he invested a handsome money in life insurance endowment plan.Along with that he is a market savvy investor wherein he invested in mutual funds also for guaranteed returns he puts up his money in to debt too(fixed deposits & NPS), This clearly shows a healthy portfolio of investment and very clever move too. But he missed a very important component of Financial Planning which is Health Insurance.
Suddenly he diagnosed with Critical Illness where an CABG operation costs him 5 lakh (INR), So what option does he have in order to pay for the expenses
He has to take money from savings.
He has to break his Investments.
Take Loan.
Sell out Assets.
Above mentioned 4 options Clearly are the once one is not willing to opt. but the scenario would have been different if he has taken a health Insurance policy of proper coverage.which safeguards the hard earned Money income of Mr, Mahesh in case of Medical Emergencies.
Medical Inflation:-
What is Medical Inflation, For a layman Medical inflation is the increasing cost of Medical Treatments & facilities. the question is how they are directly linked to buying a Health insurance Plan.
This will be more clear with the statistics
This chart clearly shows the skyrocketing increase in the medical cost in rural as well as Urban sector.
The cost of Medical Treatment of very common critical Illness CABG(Coronary Artery By Pass Graft) in the year 2006 was around 2-3 lakhs average which is around 7-8 lakhs in average during the year 2015.
show this clearly shows how this cost impacts our pockets and to have a Health Insurance with proper coverage will help us to get rid of such a situation.
Tax deduction of Health Insurance Premium (Section 80d)
Health insurance premium paid for Self, Spouse or dependent children is tax deductible upto Rs 25,000. Earlier the limit was Rs 15,000 and this limit has been increased to Rs 25,000 in Budget 2015-2016. If any one of the persons specified is a senior citizen and Mediclaim Insurance premium is paid for such senior citizen then the deduction amount now is Rs. 30,000. From Financial Year 2015-2016, this limit is increased to Rs 30,000 from Rs 20,000 (applicable in FY 2014-2015).
Health Insurance premium paid for parents is tax deductible up to Rs 25,000. If your parents are senior citizens (60 years and above) then the maximum allowable deduction is Rs 30,000.
Below table shows you the quantum of tax deductions applicable on health insurance premiums.
Nutshell
Dont buy Health Insurance just for the sake of Tax planning as it has much more to offer.
Regards
Jitender Singh
