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Posted by Royal Sundaram on 08 Feb 2017
Securing your health with an insurance policy is an essential investment. While, it covers your health expenses when need arises, it also serves as an efficient way to manage income tax.
Wondering how? Well, the income tax policy of our country allows us to avail several tax benefits on the money we spend on buying a health insurance policy.
Here are the list of Provisions that enable you to save income tax through purchase of health insurance policy:
- Section 80D of the income tax act allows tax-exemption on the premium you pay against your individual health policy as well as the cover you buy for your spouse, children and/or parents.
- Even if your parents and/or your children are not dependant on you, you can still avail this tax benefit.
- However, the maximum deduction allowed on the insurance premium, in this case, is subject to the age of the insured individual.
- For parents aged less than 60 years, the maximum amount of eligible tax exemption cannot exceed Rs.25, 000 in a year.
- If your parents are aged more than 60 years, you can buy a senior citizen plan for them and extend this limit to Rs.30, 000 per year.
- The premium paid for an insurance policy to cover a handicapped dependant is also exempted from tax.
- This dependant can be your spouse, child, parent or a sibling.
- Under such a situation, the tax deduction further extends to a limit of Rs.75, 000 in a year.
- However, the dependant should prove to be 40% handicapped in order to make use of this benefit. In case of severe disability of more than 80%, the amount deduced can be up to Rs.1, 25,000.
- A health insurance rider is also eligible for this tax-exemption, under the Section 80D of the Income Tax Act.
- Tax benefits can also be availed on the money spent on preventive health check-ups, up to a limit of Rs.5,000 in a year, under the Section 80D of the Income Tax Act.
Exclusions to Tax Saving
If you pay your health insurance premium in cash, it would not qualify for a tax-exemption. Therefore, it is important to make such a payment through a banking channel, like—credit/debit card, cheque, net banking or a demand draft.
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