Learn About Tax Benefits on Multi Year Health Cover Premiums
Updated On Feb 07, 2024
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One should buy health insurance cover with the intention of safeguarding your savings at the time of unforeseen events instead of expecting an investment tool with returns. Health insurance is significantly necessary and not just an option today, owing to the rising cost of healthcare expenses. Getting yourself insured with health insurance cover helps you protect your planned budget in case any mishap happens.
Due to the lack of awareness, people are unsure about purchasing a health insurance plan as it involves paying premiums and does not provide any returns. However, a health insurance plan covers you at your lowest time, so it is important to purchase a health plan for everyone. Moreover, purchasing a health insurance plan would additionally help you in saving taxes under section 80D of the Income Tax Act.
Tax Benefit in Health Insurance Plan
Under section 80D, an individual is eligible to avail tax benefits on their health insurance plans on the payment of premium towards health insurance for that specific year at the time of filing the yearly Income tax form. Apart from section 80D, an individual can also obtain tax benefits from section 80C. However, saving taxes under section 80 D is just for health insurance plans, where an individual can obtain tax benefits on health insurance plans for the entire family and dependents.
Under Section 80D: Tax Exemption On Health Insurance
Tax deductions applied under section 80 D of the Income Tax Act are as follows:
| Category | Deduction limit | Total deductions under section 80D |
| Insured members aged below 60 years | For self, spouse, and children-Rs 25000 For Parents- Rs 25,000 |
Rs 50,000 |
| Insured family members( including self, spouse, and children) under 60 years and parents above 60 years. | For self, spouse, and children-Rs 25000 For Parents- Rs 50,000 |
Rs 75,000 |
| All insured members including parents above 60 years | For self, spouse, and children-Rs 50,000 For Parents- Rs 50,000 |
Rs. 1,00,000 |
Note: Inclusive of the overall tax deduction amount, an individual can avail of tax benefits of up to Rs 5,000 on preventive health check-ups.
Tax Benefits from a Multi-Year Health Insurance Plan
Now that you know the importance of health insurance tax deductions that you can claim from a health insurance plan, it is highly recommended to buy a multi-year health plan. With a multi-year health insurance policy, the premium amount remains fixed throughout the duration of the plan----it acts as a savior at the time of price hikes plus as a tax saving option.
A one-time payment of premium is to be made for a multi-year health plan upfront. Therefore, it is recommended to think thoroughly before buying a long-term health insurance policy.
When it comes to tax exemption on your long-term health insurance plan, do not worry about the policy being effective for only the first year of your health insurance policy. You have the option of claiming it on a yearly basis. For instance, in case a person has paid Rs 30,000 for a three-year insurance plan, the amount of tax exemption that can be availed is Rs 10,000.
Conclusion
Health insurance offers you protection at the time of need and at the same time, it also protects your savings. Hence, ignoring this tax-saver would not be a wise option. Before purchasing a health insurance plan, make sure to speak with your health insurance provider to know the amount of tax deduction you can avail from the insurer.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
