Tax saving investments and tax planning are integral parts of financial planning for an individual. A proper plan helps to meet the financial goals and save taxes. It, therefore, requires a blend of multiple options available to tailor make a plan which suits your needs best. The following article will discuss about how to save income tax using life and health insurance.
It is one of the most effective tax planning instruments. It offers not only protection but also a long-term saving and tax saving option, thus stands an essential part of an individuals’ financial portfolio. Life Insurance provides family security and therefore, is a prime responsibility of the earning member. Life insurance offers individual with tax benefits on the premium paid. With multiple options to choose from such as endowment plans, whole life plan, term plan, unit linked plan and so on, it is easy to find a product which fits the pocket and need. Tax benefits can be availed on the premium up to 1.5 lakhs under Section 80C of Income Tax Act.
Mediclaim or Health Insurance policies are another tool widely favourite today. With rising medical expenses, the medical cover is an essential part of the financial portfolio. It covers medical costs incurred due to hospitalisation or accident. According to section 80D, there is a provision for deduction amount up to Rs.15,000 towards health insurance which can be claimed. This tool includes tax exemption for not only the individual or family but even the parents. For individuals paying the premium for parents over 60 years of age, an additional benefit of Rs.20,000 is provided, for those under 60 years, the benefit availed is of Rs.15,000. The dependency status does not restrict the additional benefit for parents. For individuals with parents over 60 years, an additional exemption of Rs.5000 can be availed for preventive health check-ups. The maturity value is tax-free.
Today, many companies offer a group insurance policy for the employees and dependents and attractive premium pricing for parents. Since sometimes the policy may not include certain surgeries, additional coverage is required primarily for parents. Opting for lifelong policies especially for parents is a long-term saving plan. Health Insurance Policies are the tricky business and need one to verify and cross-check the terms and conditions. For example, it is wise to check the ceasing age of the policy, especially in the case of parents. Today there are multiple products available to meet the demands of customers and customise the benefits.
Apart from the mentioned options, there are more tools available which can be added to a financial portfolio if you have a question- how to save income tax!