Health insurance can be described as a product that covers both medical and surgical costs of a policyholder. For instance, if an individual has been hospitalised due to an injury, illness or accident, they are reimbursed for the expenses incurred.

However, it is important to understand that an insurance company extends these services to policyholders who pay the sum insured or premium at regular intervals. Any failure to do so can lead to the suspension or cancellation of the policy.

An insurance company offers compensation to policyholders through these two channels:

As part of the cashless treatment, the policyholder does not have to pay anything to the network hospital, since the insurance company pays the hospital directly.

The second option is reimbursement. In this case, the policyholder has to pay for the medical expenses at the time of treatment, which are then reimbursed by the insurance company at a later date.

 

 

Benefits of Health Insurance

The phrase ‘health is wealth’ holds true, since good health is the cornerstone of a happy and fulfilling life. While preventive measures can be taken to ensure your physical and mental health stays on track, one can never predict any medical emergencies that may come announced. That’s why it is important to plan for the future well in advance, so that you don’t lose both your finances and peace of mind. Here are few benefits of health insurance:
1
Covers OPD-related expenses:

Health insurance plans cover all the expenses related to minor and major medical concerns, including consultations with the doctor, expenses at the pharmacy as well as diagnostic tests.
2
Takes care of pre and post-hospitalisation:

As mentioned above, health insurance plans cover medical costs incurred both before and post-hospitalisation.
3
Covers pre-existing illnesses:

If you sign up for health insurance, pre-existing diseases will also be covered once the waiting period has been completed.
4
Extends cashless treatment:

This is one of the biggest features of health insurance policies, since the individual doesn’t have to arrange cash to pay hospital bills. The insurance company will pay it directly to the hospital.
5
Offers tax benefits:

Policyholders can claim a tax deduction on health insurance premium under Section 80D of the Income Tax Act, 1961.
6
Provides additional sum insured:

Lastly, if a policyholder has no claims in a particular year, they can enjoy additional sum insured as a benefit.
Tax Benefits with Health Insurance

While financial protection is one of the biggest benefits offered by a health insurance policy, it doesn’t end there. Tax planning is another advantage that encourages individuals to sign up for health insurance. That’s because the premium paid towards a health insurance policy is eligible for exemption under Section 80D of the Income Tax Act. However, the upper limit for the deductible amount is Rs 25,000 which can go up to Rs 50,000 for senior citizens.

In that case, the policyholder can enjoy a deduction of up to Rs 75,000 from the taxable income.

In rare cases, when the age of the policyholder and his/her parents is over 60 years, the deductible amount can go up to Rs 1 lakh. This deduction can be claimed by providing premium payment receipts and the insurance policy copy that gives the name of the family members, the relationship as well as the age.

Also, this deduction can be availed if the premium is paid through any other channel but cash.

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