5 Health Insurance Tax Benefits: What You Need to Know
Mini Balakrishnan
When you give priority to your health and opt for an Insurance Plan that protects your financial issues without you having to spend too much on Health care expenses, you are almost relaxed.
But for the health insurance plans the premium amount paid is subject to tax deduction under Section 80D of the Indian Income Tax Act. which means the premium amount you pay for your health insurance policy can be reduced from your taxable income with certain limits. Almost all health insurance plans give you tax benefits on the premium amount you pay.
This tax benefit is certainly very useful as you don’t have to worry too much about income tax deduction again. along with it your health also gets protected without many expenses. Let’s look at the details of how tax benefits apply to each plan and each type of health insurance.
Tax Benefits of Health Insurance Policies
Tax Benefits Under Section 80D of the Income Tax Act
Section 80D of the Income Tax Act provides taxpayers with deductions on premiums paid for health insurance policies. This section allows you to claim deductions for premiums paid for your own health insurance, as well as for the health insurance of your family and parents. The deduction limit varies based on the type of coverage:
- Up to ₹25,000 for individuals below 60 years of age.
- Up to ₹50,000 for senior citizens (above 60 years).
- Up to ₹75,000 if the policy covers yourself and your senior citizen parents.
Example: If you buy a policy covering yourself and senior citizen parents, you can claim a deduction of up to ₹75,000. To claim this deduction, premiums must be paid via non-cash modes like cheque, online transfer, or credit card.
Section 80DDB – Tax Deductions for Critical Illness Treatment
Section 80DDB allows taxpayers to claim deductions for medical expenses incurred while treating specified critical illnesses. You can claim a deduction of up to ₹40,000 for treatment expenses, or ₹1 lakh if the patient is a senior citizen. Eligible critical illnesses include conditions like cancer, neurological disorders, and renal failure.
To claim this benefit, proper documentation, including medical certificates from a recognized doctor, is required to substantiate the treatment expenses.
Section 10(10D) – Tax-Free Insurance Payouts
Section 10(10D) provides an exemption from tax on payouts received from life insurance policies, including term insurance and ULIPs (Unit Linked Insurance Plans), under specific conditions. The exemption applies when the premium paid does not exceed 10% of the sum assured for policies issued after April 1, 2012.
Example: If you receive a payout from a life insurance policy, it will be tax-free, provided the premium does not exceed 10% of the sum assured. However, if the policy is surrendered early, the payout may not qualify for the tax exemption. Also, note that TDS (Tax Deducted at Source) may apply if the conditions aren’t met.
Top 10 Insurance Savings Plans In India And Their Benefits
There are investment plans in Insurance policies for people to save their money in a systematic way so that they can get benefits on their long-term financial commitments in life. The insurance savings plan offers so many features to meet an individual’s specific needs. The policyholder also gets benefits on their insurance cover by opting for a savings plan.
For example, under a savings plan, the death benefit is directly paid to the nominee of the policy in case of the unfortunate death of the insured. One major attraction of savings plans is that they are supported by the Government of India or other public sector banks. This way the people who opt for a savings plan get complete security and safety in their finances.
Let’s look at the top 10 Savings Plans in India and their Sum Assured benefits along with Tax Benefits:
| Policy Name | Sum Assured | Tax Benefits |
| Bajaj Allianz Guaranteed Assure | Rs. 1 Lakh/ No Limit | Every Claim received and premiums paid are eligible for benefits Under 80C and 10(10D) of the Income Tax Act |
| Bharti AXA Life Secure Savings Plan | Depends on the chosen premium amount | Benefits applicable to the premium paid as per Section 80C on every claim received and Section 10(10D) of the Income Tax Act |
| Birla Sun Life Insurance Bachat Endowment Plan | Rs. 1 Lakh/ No LimitSum Assured on death is higher than the basic SA or 10 times the yearly premium subject to a minimum of 105% of all premiums paid till the demise of the insured. | Benefits applicable to the premium paid as per Section 80C on every claim received and Section 10(10D) of the Income Tax Act |
| Canara HSBC Smart Vriddhi Plan | 100 times the monthly Income. | Premium paid benefits will be applicable under Section 80C and any claims will get benefit Under Section 10(10D) under Income Tax Act. |
| Future Generali Pearls Guarantee | Based on Age and Policy Term | Tax benefits are applicable on the premium paid and also the Death and Maturity benefits under Section 80C and Section 10(10D) of the Income Tax Act respectively |
| HDFC Life Pension Super Plus Plan | Depends on the type of cover opted that is based on the benefits offered by the insurance company. | Income tax benefits include Section 80CCC on the premium paid and on the commuted part as per Section 10(10A) of the Income Tax Act. The Death benefit under Section 10(10D) is excluded. |
| ICICI Pru Subh retirement Plan | Depends on the type of cover opted for as per company terms. | Premium paid is exempted from tax under Section 80C of the Income-tax Act and one-third of the maturity benefits are exempted under Income Tax Section 10(10A). An Annuity is taxable. |
| India First Simple Benefit Plan | Rs. 2 Lakhs – Rs. 5 Lakhs | Benefits are available as per Section 80C and 10(10D) of the Income Tax Act. |
| SBI Life Smart Wealth Builder Plan | Depends on the age and type of premium paid as per company terms. | Benefits are available as per Section 80C and 10(10D) for claims under the Income Tax Act. |
| TATA AIA Fortune Guarantee Plan | The basic amount is upto 10 times the yearly premium. | Tax benefits include Section 80C. |
For the people who are subject to tax payments according to their income, the Government of India offers tax benefits by reducing the premium amount under Section 80D of the Indian Income Tax. The tax benefits are allowed on premiums paid for critical illness too. To save on tax, a variety of deductions are available under various sections of the Income Tax Act.
Tax Benefits are subject to change from time to time and it’s highly recommended to speak to tax consultants before you make any investments under any Insurance Plans.
Conclusion:
In conclusion, health insurance not only provides essential financial protection against medical expenses but also offers significant tax-saving advantages. By investing in health insurance policies, you can safeguard your health and reduce your tax burden simultaneously.
Key sections like 80D provide clear benefits, allowing you to claim deductions on premiums paid for yourself, your family, and even your senior citizen parents. Understanding the tax benefits available under the Income Tax Act ensures you maximize the advantages, whether through deductions on premiums, medical expenses, or tax-free insurance payouts.
By leveraging these tax-saving opportunities, you can enjoy both better healthcare coverage and a lighter tax load.
