While most people know the adage ‘Health is wealth’, few live like it. Indians, for one, still primarily rely on their savings to cover medical expenses. For perspective, out-of-pocket expenditure constituted 47.1% of the total health expenditure in 2020. Fortunately, health insurance can help reduce these expenses.
When you buy a health insurance policy, you pay an insurance company a small annual sum called the premium. So, when a medical emergency strikes and you apply for the claim, the insurance company covers expenses equivalent to the sum insured limit, which is decided before signing the policy agreement. This means you don’t dip into your savings to cover medical costs. And this alone makes it extremely important to have health insurance as a part of your financial planning.
Looking for more reasons to include health insurance as a part of your financial planning process? Read on to find out.
Five reasons why health insurance should be a part of your financial planning
1. Combating health emergencies
You could spend an eternity building your savings. But it takes only one medical emergency to wipe them out. Not to mention, accessing these funds can be stressful, and there is uncertainty surrounding when you can replenish your savings.
A health insurance policy relieves such financial stress in exchange for a small annual premium. Most personal health insurance policies offer coverage for various medical health emergencies. So, if you opt for a policy tailor-made for your medical needs, you don’t have to worry about depleting your savings to meet your medical expenses. To make the process even more hassle-free, many insurance companies also partner with hospitals to streamline processes. This makes the redemption process simpler.
2. Rising medical expenses
Saving is easier when there is an end goal in sight. But the rising costs of treatments and medication mean that saving goals increase continuously. This makes accomplishing these goals taxing, especially if you do not have significant funds to put away for savings. Once again, health insurance policies can help.
You can divulge a small amount towards your insurance premium annually and be assured of coverage for medical expenses as stated by your policy.
3. Coverage for loved ones
If you have dependents, you also want to put aside some savings towards their future medical expenses. A family insurance policy makes this simpler by allowing you to pay an annual premium towards medical coverage of all your family members.
The sum insured via a family insurance policy can be used by any family member needing medical aid. So, they can benefit from high coverage if you opt for a high sum insured limit. These days many health insurance providers offer comprehensive coverage. This means you can choose a plan depending on your family’s medical needs. The best part? If you have a new member in your family, adding them to the family insurance plan is easier than ever. You only need to request your insurance company and pay an added premium.
4. Retirement planning
Most people anticipate their post-retirement needs and start a retirement fund to pay for it. What they fail to consider is that health complications increase with age. Besides, given the rising cost of healthcare, treatments will become expensive as well. With minimal additional income post-retirement, covering these expenses can be difficult when emergency strikes. What’s more, your post-retirement fund may not cover these spendings.
Health insurance can help with it.
You can easily choose a health insurance policy that covers your medical expenses well after you retire, and rest assured your medical expenses will be taken care of.
5. Tax savings
Those who have engaged in financial planning understand that claiming tax exemptions can reduce their tax liabilities and, thereby, their spending. But did you know that getting health insurance can help with it?
You can claim tax deductions for healthcare expenses under Section 80D of the Income Tax Act. This includes costs incurred towards health insurance policies. Note that the tax deduction applicable depends on the family members included in the health insurance coverage.
According to the law, if the insurance covers the insurer's immediate family, including partner and dependent children, they can claim up to Rs. 25,000 in tax deductions provided the family members are under 60 years. If the policy covers the insurer, their parents, the spouse and other family members, all of whom are under 60, the insurer can claim up to Rs. 50,000 as tax deductions.
Moreover, if the policy covers the insurer, their spouse and dependent children under 60 years old and parents above 60 years, they can claim up to Rs. 75,000 in tax deductions. And finally, if the insurer, their spouse, dependent children and parents are over 60, they can claim up to Rs. 1,00,000 in tax deductions.
Now that you know the five reasons why health insurance policies should be a part of your financial planning, are you considering getting health insurance for yourself or your family?
If yes, consider partnering with Tata Capital Wealth. We provide comprehensive health insurance policies to cover unexpected medical expenses and offer various premium payment options. Visit our website to learn more.
05 July 2023
5 mins read
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