*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
One of the most important aspects of financial planning is saving taxes for every fiscal year. If you plan intelligently you will be able to meet your financial goals and also save taxes. Investing in any of the general insurance products makes senses because it protects your future and also offers tax benefits.
Some of the most common forms of general insurance products include travel insurance, motor insurance, home insurance, health insurance, fire insurance, marine insurance, etc. among others. And there are a number of general insurance companies in India from where you can buy any of the policies
Following are the general insurance instruments wherein you can invest your money to avail tax benefits:
With an increase in the number of lifestyle-related illnesses, medical treatment and hospitalization costs, investing in a health insurance policy has become almost inevitable. It works as a cushion in times of accidents and life-threatening diseases. Simultaneously, it also works as an important tax saving instrument.
Under the purview of the Sec. 80D of the Income Tax act, the medical insurance premium that you pay offers tax saving benefits. It covers your health-related perils and also works as a lucrative tax saving instrument. And the tax benefits on senior citizen medical insurance premiums are comparatively higher.
In case, none of your family members are over 60 years, then the tax deduction limit on medical
insurance premium is up to 25,000 rupees. Also, for health insurance that you pay for your parents below 60 years of age, then also the deduction limit is 25,000 rupees. It makes the total deduction limit up to 50,000 rupees.
In case, either of your family members is over 60 years, then the tax deduction limit on medical
insurance premium is up to 50,000 rupees. Also, for health insurance that you pay for your family including self, children, and spouse, then your tax deduction limit is 25,000 rupees. It makes the total deduction limit up to 75,000 rupees.
Where either of the family members’ including self, children or spouse is above 60 years, then the tax deduction limits on medical insurance premium is up to 50,000 rupees. Additionally, for parents above 60 years of age, then also your tax deduction limit is 50,000 rupees. It makes the total deduction limit up to 1 lakh rupees. Remember that the medical insurance premium paid for your siblings and in-laws will not offer tax benefits.
Another important point to note is that you can only avail tax benefits on non-cash payments only. You can make the payment via cheque, internet banking, credit/debit card, and demand draft to avail the tax benefits.
You can avail tax benefits on the premium paid for top-up health insurance plans. A super-top up plan offers compensation upon exhaustion of the sum assured of the base policy or when the cost of treatment or hospitalization expenses exceed the deductibles limit then the amount is paid over and above it.
Whereas, Super top-up plans pay for collective medical expenses during a policy period once the claim amount exceeds the sum assured of the base plan and the deductible limit. Basically, it compensates for expenses that are covered by your base policy or by your top-up medical insurance plan.
For instance, your base policy is of 5 lakh rupees, and your top-up and the super top-up plan is of 10 lakh rupees. And the limit of deductibles for both is 5 lakh rupees.
Suppose you have made two claims of 4 lakh rupees each in a year. And your basic health plan will compensate 4 lakh rupees and 1 lakh rupee of the claims. You cannot use your top-up plan as it has a deductible limit of 5 lakh rupees, and the cost of your medical treatment is below that range. However, you can use your super top-up plan for the remaining 3 lakh rupees.
The amount of premium paid towards both top-up medical insurance and super top-up health plans is eligible for tax saving benefits u/s 80D of the Income Tax Act of 1961.
Taxes saving benefits on these top-up plans are similar to basic health insurance plans. Premium paid for insurers below 60 years of age can fetch you tax benefits up to 25,000 rupees and up to 30,000 rupees for senior citizens. And the tax deduction limit for parents is similar to a standard health insurance policy.
Tax benefits are not available on cars being used for personal purposes. However, if a car or four-wheeler is being used for business purposes, then it can be shown as an expense and you can claim tax benefits against the premium paid. You cannot show the premium paid on a personal car as a business expense, therefore the premium also is not eligible for tax benefits. This clause is only applicable for the duration the vehicle is being used for business purposes.
So, the next time while purchasing an insurance policy you can consider the risks that it covers and also the tax saving benefits that it offers.
*Tax benefit is subject to changes in tax laws