A health insurance policy helps your clients in medical emergencies by taking care of the medical costs suffered. Moreover, it also helps your clients save tax. While your clients might be buying health insurance plans to save themselves from the financial implications of this pandemic, let them know that they can also save taxes with the policy.
Let’s have a look how –
Section 80D of the Income Tax Act, 1961
Section 80D lays down the rules of tax-saving with health insurance plans. According to this section, if you or your clients buy a health insurance policy, its premiums would be allowed as a deduction from the taxable income. This deduction would reduce the amount of taxable income which, in turn, would reduce the amount of tax liability.
The limit of deduction that Section 80D allows on health insurance policies is as follows –
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Health plan bought for self, spouse and dependent children when you or your client is below 60 years of age |
Up to INR 25,000 |
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Health plan bought for self, spouse and dependent children when you or your client is 60 years and above |
Up to INR 50,000 |
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Health plan bought for parents who are senior citizens |
Up to INR 50,000 |
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Health plan bought for self, spouse and dependent children when you or your client is below 60 years of age + Health plan bought for parents who are senior citizens |
Up to INR 25,000 + Up to INR 50,000 |
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Health plan bought for self, spouse and dependent children when you or your client is 60 years and above + Health plan bought for parents who are senior citizens |
Up to INR 50,000 + Up to INR 50,000 |
Thus, by buying an independent health plan for senior citizen parents, an additional deduction of up to INR 50, 000 can be claimed in addition to the deduction available on a health plan for self. The total deduction available, through health insurance premiums, is up to INR 1 lakh. If you or your client is in the 30% tax bracket, a saving of INR 45, 000 can be availed on the tax liability.
Moreover, in the Union Budget 2021, no changes have been made in the tax benefits on health insurance plans. So, even if your clients buy a policy in the next financial year, they can continue to enjoy the afore-mentioned tax benefits.
Inform your clients about the tax saving benefit of health insurance plans too. If your clients already have health insurance, assess if their coverage is sufficient or not. If the coverage is not sufficient, ask them to invest in a top-up or super top-up health plan to enhance their coverage at an affordable premium rate. If, however, their coverage is sufficient, you can stress on the importance of having a critical illness plan for an all-round protection. Besides providing enhanced protection, a top-up or critical illness plan would also help your clients save higher taxes. Moreover, an independent policy for parents is also recommended so that their parents can be adequate coverage and they can reap the benefit of higher tax saving.
Health insurance can be a technical concept and if you need any help in understanding the needs of your clients and/or in selling health insurance, you can always make use of TIE (Turtlemint Insurance Expert). TIE would give you all the necessary information about the technicalities of insurance policies and help you make a successful sale. So, visit https://pro.turtlemint.com/health-insurance/TIE or talk to TIE at 022 68343401 and get the solution to your queries.
The tax angle of health insurance can help your clients save the maximum possible tax and you can also drive up your sales figures. This is the last quarter of the financial year and, when your clients are looking at tax-saving avenues, help them understand the tax benefit of health insurance plans and give a boost to your business too.
