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How Health Insurance Can Save Money

Posted by Royal Sundaram on 10 Mar 2014

With public health expenditure in India at a little over one per cent of GDP, out-of-pocket payments are the predominant mechanism for financing healthcare in the country” – an excerpt from ‘Health Insurance Vision 2020’ released on December 13, 2013. This highlights the importance of getting health insurance, as a medical emergency can quickly translate into a huge financial crisis for the entire family. While most of us understand this, we often do not consider the fact that such an insurance policy can actually save money.

InsuranceSaving Money with Health Insurance

A health insurance policy will help you save money in the following ways:

Covers More than the Premium Paid: In view of the escalating medical costs, a health insurance policy can save you a lot of money in case of an unfortunate event. This kind of insurance not only covers hospital bills and doctor’s fees, but may include a daily cash benefit of Rs.500* for each completed 24 hours in hospital  payable  up to maximum of 20 days during policy period and for a  maximum of 60 days for all insured persons of the family during the policy period. Moreover, the policy may offer a Convalescence benefit of up to Rs.10,000* per insured person for hospitalization exceeding 21 days.

Tax Deductions: The premium paid for health insurance is tax deductible under Section 80(D) of the Income Tax Act, 1961. The deductions are offered in the following manner:

  • Rs.15,000 can be deducted for health insurance premium for personal, children, and spouse
  • Rs.15,000 can be deducted for health insurance premium for dependent parents
  • Rs.20,000 can be deducted for medical insurance premiums for dependent parents who are senior citizens

These deductions are excluding the Rs.1, 00,000 savings accessible under Income Tax deductions clause (80C).

No Claims Bonus: You may be entitled to a bonus during the time of renewal of your health insurance policy in case you have not made a claim in the preceding period. This bonus is typically in the form of a discount in the premium. Paying a lower premium, while enjoying the same coverage, helps save money.

Discounts: Some policies offer discounts in premium when you insure more family members under the same policy.

Top-up Cover: In case you have some cover under your company’s group insurance policy, you can opt for a top up cover, rather than taking an additional policy to increase the sum insured. This could save your premium costs considerably.

The best way to save money with health insurance policies is to purchase them early. The younger you are, the less will be the premium. This is because you are perceived to be healthier and free from medical complications when you are younger. So, don’t delay in opting for a health insurance policy. More than saving money, it affords you sound treatment in case of a medical emergency. And, going by the old saying ‘health is wealth’; your medical insurance could prove to be the best investment you ever made.

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One response to “How Health Insurance Can Save Money”

  1. Prasad says:

    “The best way to save money with health insurance policies is to purchase them early” Couldn’t agree more to this. A health insurance policy will definitely save us some bucks!

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