Boost the ‘Health’ of your investment portfolio with the right Health Insurance plan

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Boost the ‘Health’ of your investment portfolio with the right Health Insurance plan

Ashish Mehrotra

07 July 2019

As we step into the new fiscal, most of us commence our annual tax planning regime. But how many of us really consider ‘Health Insurance’ as an important aspect of a personal investment portfolio? 

- Even those who do, usually end up buying it just to save tax. This is not how health insurance, which is essentially a long-term investment tool, should be perceived. In fact, you might be hurting your long-term financial health by focusing purely on short term investment plans such as FD, RD, etc. While these are certainly good for fulfilling specific financial goals, it is also important to understand that one must align the larger, long-term investments such as health insurance with tax saving instruments to maximize returns. 

- Health insurance is a financial tool, which protects one from any medical emergency. However, it is important to note that one should always be adequately covered to meet any unforeseen eventualities given the rising healthcare expenses. You should therefore review your policy every two to three years to account for medical inflation and changes in life events, to ensure that the sum insured limit is adequate. 

- The most common mistake which people make is to buy health insurance just to save tax. They fail to look at the larger objective of protecting and insuring the health of their families, reaping maximum benefits at a minimum premium payment amount. 

- It is always recommended to enroll in a health insurance plan early in life, preferably before you hit 30, to avail full benefits. During early years, people are in the pink of health, so they can buy the policies without any caps/ limitations w.r.t pre-existing diseases. One also has enough time to meet the waiting period so you can avail the plan when you need it. 

- Further, it is always recommended to buy a family floater health insurance plan compared to Individual health plans. Plans such as Max Bupa’s Heartbeat Family First Plan, not only offer coverage for up to 19 relationships with an individual sum insured for everyone, but also a floating sum insured that is accessible to any family member. 

- Further, plans like Max Bupa’s GoActive Family Floater, designed for today’s new-age audience ensures overall wellness with additional benefits like OPD Consultations, I-Protect, AdvantAge, Health Coach and more. It not only cares for your health but your wealth too, with tax saving benefits under Section 80D of the Income Tax Act. The benefit is available to individuals on health insurance premium paid for self, spouse, children and parents. Importantly, it does not matter whether the children or parents are dependent on you or not. 

- For the premium paid for self, spouse and children, the maximum deduction that can be availed is Rs. 25,000 a year, when the eldest insured is under 60 years. In case any of these members are above the age of 60, then the maximum allowable deduction is Rs. 50,000 a year. 

- There is a deduction of Rs. 50,000 allowed in case parents are above the age of 60 years. An adequate annual cover for your household can, therefore get you an exemption of up to Rs. 1,00,000. 

- That is sizeable and significant for every portfolio. You can also top up your health insurance portfolio with a critical illness plan like Max Bupa’s Criticare if you have a family history of serious ailments or critical illnesses. 

- It is important to emphasize here that the tax benefit should be seen as a side benefit or a ‘bonus’ of sort. The real objective is to enroll yourself in a comprehensive health insurance plan in order to financially secure yourself and your family in case of a medical emergency. 

Everyone has their own set of individual financial goals. Yours may include funding a child's education, buying a home, starting your own business, minimizing your tax costs, enjoying a comfortable retirement, or any combination thereof. But no matter which financial goals you choose, developing a comprehensive financial plan will help you in achieving them in a systematic manner.

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Health Insurance Benefits

The cost involved in healthcare today is extremely high making health insurance a part and parcel of our life. Medical emergencies can approach us any time and turn our world upside down, leaving us shattered and broken. Health insurance policy is a saviour in such cases and can cover the financial loss during such an emergency to a great extent. Health insurance policies may not provide coverage for emotional loss however, are great supporters for people during medical emergencies and especially when they are dependent on funds for survival.