Skip to main content

Optimise your Medical Cover





Choose medical insurance according to your needs, not to avail tax benefits.

Indians are known to leave things for the last minute, and tax planning is no exception. As the end of the tax saving season nears, there is a mad rush to buy whatever instrument offers tax deduction. Medical insurance is one such product. The premium paid for health insurance, up to `25,000, is allowed as special deduction under Section 80D (`30,000 for senior citizen), and can help save a significant amount of tax. For instance, a senior citizen in the 30% tax bracket, who spends `30,000 on medical cover, can save `9,027 in taxes (see table).

However, you need to consider whether you are buying health insurance for the cover you need, or only for tax savings. If it's the latter, it might not be a good idea. This is because heath insurance premium is a `spending' and should not be treated as an investment.


The first question to answer in this regard is whether you need medical cover at all. Experts believe that basic medical cover is necessary even for people who have a substantial contingency fund stashed away. When medical insurance is available at reasonable cost, there is no need for you to dent your contingency fund for this. You can save, but one trip to the hospital can wipe out the savings you have accumulated over 10 years.


As mentioned earlier, it is important to keep in mind that health insurance is not an `investment' that will come back to you later, and therefore, any insurance beyond your need is a waste. The second question, therefore, is how much cover do you need? This varies depending on the age (you will need less cover when you're younger and more as you age), as well as on family medical history (take bigger cover if your parents are prone to certain hereditary conditions like diabetes and hypertension).


The third question to ask yourself is what kind of cover do you need? Since Section 80D benefits are also available for smarter products like critical illness covers, top up plans, etc., there is no need to buy medical cover for taking advantage of Section 80D benefits alone. This question is critical because most of us may have some kind of cover. For example, the government provides healthcare facilities to its employees. Most people working in the organised sector also have some group insurance cover. Is that enough, or should you buy a personal health cover as well? The general consensus among experts is that it is better to have an additional personal cover. One issue with the company cover is that you lose cover as soon as you quit the job. I was between jobs when I needed the health insurance. Another problem of relying only on company cover is that it becomes difficult to get health insurance cover after retirement.


The base cover itself comes in two forms-one with sub limits (for instance, that maximum room rent cannot exceed `3,000 per day), or one without. Ideally, one should go for insurance without any sub-limits. Using a top-up plan is a smart way to reduce cost without compromising your insurance cover. Compared to a base cover of `10 lakh, a combination of base cover and top up will be cheaper. Instead of taking a base cover of `10 lakh that costs around `7,500, you can go for a base cover of `2 lakh, which costs around `2,700, and a top-up of `8 lakh, for an additional cost of `3,800, so the total cost will come only around `5,500.


However, people who choose the top-up option need to be careful about the type of top-ups they buy. "Instead of catastrophic top-ups, like one where each claim needs to be above the base cover, people should opt for aggregate top-ups. These allow the claims to kick in once the aggregate amount goes beyond the base cover limit



Critical illness cover is another smart way of getting your money's worth. The main sales pitch for health covers is that they will cushion the blow if you are suddenly diagnosed with a major illness. So it makes sense to buy a cover for just that. One advantage of a critical illness cover is that you get the money when you are diagnosed with the disease, and not based on the hospitalisation and treatment,


This raises another question: do you need a base plan or a critical illness cover enough?


Base plans and critical illness covers serve two different purposes, so you need both. The work in a complementary fashion. In the event of a sudden critical illness in the family, you may be forced to take leaves for an extended period of time, say for six months at a stretch, for treatment or recovery. Critical illness cover serves as a substitute for the income you lose in the process.


In addition to direct hospitalisation expenses, there will also be various other expenses involved in dealing with critical illness. Use the base cover for the hospitalisation expenses and the critical illness cover to supplement income, and other expenses not covered under basic cover.


There are also different varieties of critical illness covers available. So, should you choose a broader plan, or one that is specific to a few diseases? This question is especially relevant because some companies are launching disease-specific plans that cover only major illnesses like cancer and heart disease. Most major diseases are covered under critical illness plans, so there's no need to opt for disease-specific plans










Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 10 Tax Saver Mutual Funds for 2017 - 2018

Best 10 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield 

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan



Invest in Best Performing 2017 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms


For further information contact SaveTaxGetRich on 94 8300 8300

------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300



 

Popular posts from this blog

ICICI Prudential Dynamic Plan Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...

Group Health Insurance

Buy Group Health Insurance Online   For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...

SBI MAGNUM MIDCAP ONLINE

Invest SBI MAGNUM MIDCAP ONLINE   SBI MAGNUM MIDCAP fund didn't fare well in its initial years but, in recent years, has steadily improved its performance under the capable hands of its current fund manager. Although investing predominantly in mid-cap stocks, the average market capitalisation of its portfolio is lower than other category peers.   Although the stock selection approach is mostly bottom-up , the fund manager doesn't shy away from taking bold sector bets , as is reflected in its large exposure to the healthcare sector. She is equally adept at handling performance across market cycles--the fund has captured more of the upside during market upticks and contained the downside during downturns in a better manner than its peers.   Given its superior risk-reward equation, the fund is a worthy pick in its category.     ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing EL...

Birla Sun Life MIP II Savings 5

  Birla Sun Life MIP II Savings 5 - Invest Online   Have you traditionally been a debt investor but now wish to test waters in equities? Then, debt-oriented funds such as Birla Sun Life MIP II Savings 5 (Birla Savings 5), which have limited exposure to equities, may fit your requirement. With a five year return of 10.5 per cent compounded annually, the fund managed a good 3-3.5 percentage points more than its benchmark Crisil MIP Blended Index, as well as its category average. The fund appears well poised to capitalise on a falling interest rate scenario and has increased the average portfolio duration of its debt instruments in recent times. Suitability Birla Savings 5 is suitable only for conservative investors. If you want to make a beginning in equities and cannot take any short-term declines in your stride, then this fund will suit you. If you are already an equity investor and want to use a debt-oriented fund merely as a diversifier, then you may prefer peers from the HDFC and Re...

Lump Sum or SIP?

Invest Mutual Fund Online     You have a lump sum in hand and you wish to invest in equity funds. However, you have heard a lot of talk about investing in equity funds through Systematic Investment Plans (SIPs) because they help average costs, ensure you do not ill-time the market, and help you invest in small sums, besides giving you many other advantages. So, should you invest the money you have in hand in one go, or let it remain in your bank account and then do an SIP? There is no harm in investing a lump sum amount. For all you know, compounding, over the long term, could work better with lump sum. However, make sure you fulfill all of these three criteria if you want to invest in one go. Else, SIP is the way to go. #1: You invest for the long term According to past data, ideally, if you have a time frame of 12 years or more, you can consider lump sum investing (provided you satisfy the other two conditions that follow). So, what is the sanctity behind 12 years? Is it because only...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now