Health insurance is basically a type of insurance policy that is bought to cover the cost of future medical care. It has a number of advantages and provides coverage against quite a few potential liabilities, such as hospitalization, surgical expenses, medication costs, diagnostic tests and physiotherapy expenses. If you get sick or injure yourself in some way, then a health insurance policy will enable you to focus on your recovery and recuperation, instead of worrying constantly about your financial situation and the depletion of your savings. In this way, you can use a health insurance plan to ensure that despite the rising cost of medical care, you and your family always have access to cutting-edge health facilities whenever needed.
Tax Benefits of Medical Insurance
However, purchasing a health insurance plan also has certain tax benefits that most people are not as well aware of. The premium paid by the insured individual to the insurance company for the policy that has been purchased provides two main benefits:
- Financial coverage
- Tax savings
The amount of premium paid for a health insurance policy can be deducted from an individual’s total income according to Section 80D of the Income Tax Act of 1961. As a person’s taxable income is basically his or her gross total income minus any deductions, therefore, you effectively do not have to pay any taxes on the amount of money you spend on health insurance premiums for yourself and your family.
If you purchase a health insurance policy such as Reliance Health Insurance, then you can legitimately claim tax deductions for the following:
- Non-cash payment made by the taxpayer for medical or health insurance premium
- Financial contribution to a central government health scheme by an individual taxpayer
- The amount of money paid by an individual for preventive medical check-ups
- Expenses incurred for the medical needs and insurance payments of a very senior citizen
A person can claim tax deductions if they purchase an insurance policy for themselves, their spouse, their children or their parents. Therefore, you can buy coverage for the medical needs of your entire family and avail attractive tax deductions while doing so. In order to avail tax benefits, however, you must pay the premium for your health insurance policy through certain banking modes such as cheque, demand draft, debit and credit cards, etc. as cash payments do not qualify for tax deductions. You should browse through the website of a reputed insurance broker to know about the best health insurance policies such as Reliance Health Insurance and others.