Tax Planning
“Tax saving is coincidental to health insurance.”
Sound health coverage and increase in life expectancy are
clearly correlated, says Tapan Singhel
Tapan Singhel,
MD and CEO, Bajaj
Allianz General
Insurance
Is it wise to buy health insurance
merely to maximise tax benefits?
It is wise to buy health insurance because
it enhances your life expectancy. There is
a clear correlation of a good health cover
and increase in expectancy of life. If you
don’t have a good health cover, there will
either be delay in treatment or the quality of
treatment will be compromised. Tax saving
is coincidental to health insurance and if you
maximise it with a good health cover, it is
good for the individual.
What factors should be borne in
mind while identifying an ideal cover?
Adequate health insurance has two major
components to it. One, we should always
remember that there’s a year-on-year
medical inflation of 15 per cent. If you are
not increasing your sum insured according
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What are the pitfalls policyholders
should steer clear of?
People often opt for the cheapest cover
ignoring the coverage restrictions such
products pose. This could lead to a situation
where the cover is not sufficient to pay
hospital bills or the treatment or the disease
is not covered under the policy. Also, the
salaried class relies heavily on company-
provided group medical covers, which may
not be adequate and do not guarantee a
life-time continuity of coverage.
Ignoring tax breaks other
than 80C
Individuals mostly focus on Section
80C for reducing their tax outgo,
but ignore other sections. Therefore,
they miss out on lesser-known
provisions. For example, Section
10TTA can fetch up to `10,000
deduction on interest earned on
savings account maintained with
banks, co-operative societies or
post offices. Then, there is Section
80DDB, under which one can claim
deduction of `40,000-80,000 on
expenses incurred for the treatment
of critical ailments like cancer, AIDS
and chronic renal failure. The patient
could be taxpayers themselves
or dependent family members,
including siblings.
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to the rising inflation, after some years you
could be inadequately insured, even if you
are adequately insured today. Second factor
is that a person should have a holistic health
cover with a base cover, super-top up plan,
critical illness cover and also a cover which
offers daily reimbursement.
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Suresh Surana
founder
RSM Astute Consulting
Not submitting investment
proof on time may lead to
excess tax being deducted
by employers, resulting in
the need to seek refund
Outlook Money February 2018 www.outlookmoney.com
Borrowing to invest in
tax-saver avenues
The desire to cut tax liability can
tempt those facing month-end cash
crunch to take personal loans and
use credit cards to complete the
process. This could wreak havoc
on your finances as the interest
payable on such unsecured credit
ranges between 15-49 per cent. In
such cases, you can let go of the tax
benefits instead of walking into a
debt trap.
Finally, don’t take deadlines set by
your employer to submit investment
declarations casually. “This may
result in excess tax being deducted
by employers, resulting in the need
to seek refund,” says Surana.
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