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Health insurance is vital for financial protection and tax savings under Section 80 of the Income Tax Act 1961. Individual, family floater, and group plans offer various benefits.
A common mistake people make is assuming everything is covered.
World Health Day: As saying goes “most of Indians are just one disease away from falling into a debt-trap”. Keeping this mind, health insurance is a quintessential thing in this fast-pace life. It not only protects you against the financial debt, but helps you to get tax-saving options under Section 80 of Income Tax Act 1961.
Whether it’s a sudden illness or an emergency surgery, healthcare expenses can drain savings in a flash. That’s why more and more people are turning to health insurance not just as a tax-saving tool, but as a lifesaver. Sharad Mathur, MD & CEO of Universal Sompo said “Health Insurance policies are designed to protect individuals and families from health risks… tailored to different customer needs.”
Choosing the Right Plan: Individual vs Family vs Group
With so many options available, confusion is common. An individual plan covers one person, while a family floater shares the sum insured among all family members — ideal for young families looking to save on premiums. Group insurance, often offered by employers, adds an extra layer of protection.
Vivek Chaturvedi of Digit Insurance cautions “even if you have employer-provided group insurance, it’s wise to buy your own individual or family floater policy — because group covers end with the job.”
Family floater plans, Vishal Gupta of PhonePe said, offer a shared sum insured between the family members, making it cost-effective and easy to manage. Family floater plans come with lower premiums than multiple individual policies.
What Is Covered Or What’s Not?
A common mistake people make is assuming everything is covered. Cosmetic procedures, self-inflicted injuries, and even some pre-existing conditions may be excluded for a while.
“Understanding exclusions is just as critical as evaluating coverage,” says Vishal Gupta, adding that transparency builds trust.
Some of the common exclusions, as explained by Mathur, are-
1. Pre-existing conditions: Health issues that existed before you bought the policy might not be covered for the first few years (for e.g. up to 3 years). This can include chronic diseases like Diabetes, Hypertension or Heart conditions.
2. Initial And Specific Waiting Periods: When the policy is bought for the first time, most individual and family floater policies have an initial waiting period of 30 days. In addition, certain ailments like cataracts, hernias, or surgeries such as knee replacements might be covered after a specified period (for e.g. 24 months).
3. Cosmetic Procedures: Procedures that are not medically necessary like cosmetic surgery to alter appearance, are usually excluded. However, if the surgery is required due to an accident or injury might be covered.
4. Breach of Law: Medical expenses arising from an insured person committing a breach of law with criminal intent.
5. Substance Abuse: Treatment for alcoholism, drug or substance abuse or any addictive condition are excluded from coverage.
6. Unapproved Medications or Treatments: Experimental treatments, certain unapproved drugs or treatments not recognised by medical authorities might not be covered.
The Premium Puzzle: Age & Health History Matter
Premiums often rise with age and past claims. A no-claim bonus or wellness program can help keep costs down — but early planning is key. “Buy health coverage at an early age so that premiums are affordable,” advises Gupta.
“A policyholder who has not filed a claim during the preceding policy year may be eligible for a cumulative claim bonus. This is typically given either as a discount over premium or enhancement of the sum insured,” explained Gupta.
Tax Benefits Of Health Insurance Under Section 80D
Health insurance doesn’t just protect your body — it can protect your income too. Section 80D of the Income Tax Act allows for a tax deduction of up to ₹25,000 for health insurance premiums. This deduction increases to ₹50,000 for citizens above the age of 60. Taxpayers can also claim deductions of up to ₹50,000 for premiums paid towards health insurance for their senior citizen parents.
It is important to note that these deductions will not be applicable if you have opted for the new tax regime.
