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Feb 27, 2023

Discover Tax Benefits of Family Floater Health Insurance & Maximize Savings

In today’s world, the cost of healthcare is rising at an alarming rate. Unexpected medical expenses can create a financial burden on families and individuals. It is essential to have medical insurance to safeguard oneself from such unforeseen events. In this regard, a family floater health insurance policy is an excellent option for families. Not only does it provide coverage for the entire family, but it also comes with tax benefits. In this article, we will discuss the tax benefits of a family floater health insurance policy.

Medical Insurance Tax Benefits

Medical insurance is an essential tool to protect oneself and one's family from the financial burden of medical expenses. Family floater health insurance policies cover the entire family under a single policy. This makes it convenient for families to purchase insurance as it can save time.
  1. Under Section 80D of the Income Tax Act of 1961, taxpayers can claim deductions on the premiums paid towards their medical insurance
  2. The amount of deduction under Section 80D depends on the age of the policyholder. For individuals below the age of 60 years, the maximum deduction that can be claimed is Rs. 25,000 per financial year.
  3. If the policyholder is over the age of 60 years, the maximum deduction limit increases to Rs. 50,000 per financial year.
  4. If the policy covers the health insurance of parents, an additional deduction of up to Rs. 25,000 can be claimed if the parents are below the age of 60 years. If the parents are over the age of 60 years, the maximum deduction limit increases to Rs. 50,000.
  5. It is important to note that the deductions under Section 80D can only be claimed on the premiums paid towards the policy and not on any other charges such as administration fees, service charges, or taxes. **
  6. It is essential to note that the tax benefits under Section 80D deduction are only available on payment of premium by cheque, credit card, or online payment modes. Cash payments are not eligible for tax deductions.
Let’s understand this with the help of an example. Suppose Mr. Sharma has a family floater health insurance policy that covers him, his spouse, and his two children. The premium paid for the policy is Rs. 20,000 in a financial year. In this case, Mr. Sharma can claim a Section 80D exemption of Rs. 20,000. However, if his father is also covered under the policy, an additional deduction of Rs. 25,000 can be claimed by Mr. Sharma, provided his father is not a senior citizen. If his father is a senior citizen, Mr. Sharma can claim a deduction of Rs. 50,000.

Other Advantages of Family Floater Health Insurance

Apart from tax benefits in the form of exemption under Section 80D , family floater health insurance policies have several other advantages. Let us take a look at some of them.
  • Comprehensive coverage

Family floater health insurance policies provide comprehensive coverage for the entire family. It includes hospitalization expenses, pre- and post-hospitalization expenses, and daycare procedures. *
  • Cost-effective

One of the significant advantages of family floater health insurance is cost-effectiveness. It is cheaper to purchase a single family floater health insurance policy than individual policies for each family member. In India, medical expenses are rising every day, and it can be challenging to manage the costs of medical emergencies without medical insurance. Therefore, opting for a family floater plan can be an economical way to secure the health of the entire family.
  • Convenience

A family floater medical insurance policy is more convenient as it saves time and effort. The policyholder does not have to purchase individual policies for each family member, and it also simplifies the claim settlement process.
  • Additional coverage

Another advantage of family floater health insurance is that it provides flexibility in terms of coverage. Depending on the policy, family floater plans offer a variety of coverage options, including maternity coverage, newborn coverage, daily cash benefit, and so on. This flexibility ensures that the family members receive adequate coverage according to their medical needs. *
  • Hassle-free claims

Family floater health insurance policies also offer a hassle-free claim settlement process. The insurer settles the claim on a cashless basis, where the policyholder does not have to pay the medical bills upfront. The insurer directly settles the bills with the hospital. This facility can be especially useful in emergencies when the policyholder may not have the required cash to pay for medical expenses. *

Conclusion

In conclusion, family floater health insurance not only provides comprehensive medical coverage to the entire family but also offers Section 80D tax exemption to the policyholder. The premium paid towards the policy can be claimed as a deduction under Section 80D of the Income Tax Act, subject to certain conditions. It is essential to consider the coverage, premium, and benefits offered by various insurance providers before choosing the policy that best suits the needs of the family. * Standard T&C Apply. ** Please note that tax benefits are subject to change in prevalent tax laws. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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