
In today’s world, medical insurance is a very important investment because it serves as a safety net against unforeseen medical costs.
In India, If you buy health insurance for multiple years, you can get multiple advantages including easy policy management, cost savings, and, most importantly, tax benefits under Section 80D of the Income Tax Act.
In this article, we will look at the tax benefits of insurance for multi-year plans and how to claim them.
Understanding Multi-Year Health Insurance Policy in India:
A Multi-Year Health Insurance Policy is a policy that covers you for a period of more than one year.
In India, a multi-year health insurance policy is one in which a person pays the premium upfront for a period of two to three years instead of renewing the policy every year. These are policies for people who want a hassle-free way of managing their health coverage.
The question is whether medical insurance premiums are tax deductible for multi-year policies or not. Well, yes.
Let’s understand how to claim tax benefits of health insurance under a multi-year medical policy.
How to Claim Multi-Year Health Insurance Policy Tax Benefits?
Claiming tax benefits for medical insurance is a straightforward process if you follow these steps:
● Maintain Proper Documentation
Keep receipts and the policy document as proof of payment.
● Understand the Policy Term
Annual premium amount eligible for deduction is calculated by dividing the lump sum by the policy term.
● Fill Schedule 80D
When you file your Income Tax Return (ITR), you have to fill up Schedule 80D correctly.
● Verify Transactions
Premium payment should be done through acceptable modes such as net banking, debit/credit card or UPI.
Tax Benefits for Multi-Year Health Insurance Policy:
1. Eligibility Under Section 80D
Deductions on premiums paid for medical insurance are available under section 80D of the Income Tax Act. Here’s a detailed look at the eligibility criteria:
- Self, Spouse, and Children: You can claim up to ₹25,000 annually on premiums paid for yourself, your spouse, and dependent children.
- Senior Citizen Parents: Premiums paid for senior citizen parents are eligible for an additional ₹50,000 deduction.
2. Tax Benefits for Multi-Year Premiums
If you purchase a multi-year policy with a lump sum premium, the entire amount is split equally over the policy term for tax purposes. For example:
- If you take a three-year policy for ₹60,000, you can claim ₹20,000 as a deduction annually.
Other Advantages of Multi-Year Health Insurance Policy in India:
● Financial Savings
When you buy health insurance with multi-year premiums, insurers offer discounts, and hence, multi-year plans are cheaper than annual renewals.
● Convenience
With multi-year policies, you don’t have to worry about annual renewals and policy lapses.
Multi year health insurance policies in India are becoming increasingly popular because of long term financial benefits and flexibility in premium payments. These plans provide policyholders with a sure way to get comprehensive health coverage for a long time and protect them from increasing healthcare costs.
In addition, policyholders can get premium discounts and do not have to worry about renewing every year with a multi year plan. These plans are also easy to manage tax-wise and encourage financial discipline for future healthcare needs.
The Bottom Line:
Buying a multi year health insurance policy in India is a strategic investment that offers two benefits: savings and comprehensive health cover. If you know how to claim the tax benefits of insurance under Section 80D, you can optimise your tax planning and have peace of mind for your family.
So, buy health insurance from trusted providers like TATA AIG today to secure your future and reduce your tax liabilities.
FAQs:
1. What is the limit of 80D exemption?
The limits under Section 80D are as follows:
- ₹25,000 for premiums paid for yourself, your spouse, and your dependent children.
- ₹50,000 for premiums paid for senior citizen parents. If both you and your parents are senior citizens, the total deduction limit can go up to ₹1,00,000.
2. How to fill Schedule 80D for claiming the deduction?
Schedule 80D asks you to fill in details of the premium paid under certain categories, like self, family or parents. If it is a multi year payment ensure that the premium is proportionately divided.
3. Can I claim both 80D and 80DD?
If you qualify, claiming medical insurance premiums on taxes is possible. Health insurance premiums are covered under Section 80D and medical expenses for a disabled dependent are covered under Section 80DD.
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