Tax Planning & Insurance

Tax Planning and Insurance

As the financial year end approaches, there is rush to buy insurance policies to avail tax benefits.
In life insurance policies, tax deduction is possible to maximum of Rs 1 lacs. In health insurance policies, the maximum deduction is Rs 15,000 and Rs 20,000 for senior citizens. However the maximum tax deduction combined could be Rs 35,000 if individual buys health insurance for himself and his parents who are senior citizens.

Everyone just jump the bandwagon and buys insurance policies without giving it much thought apart from saving tax. However before the domino effect takes place, some careful planning can result in far greater benefit.

The first thing that should cross your mind keeping aside tax benefits is “what insurance policy do you really require?”

1. There are many life insurance policies like term plans, ULIPs, pension plans, money back policies and many more. Tax deductions are applicable under Section 80C for these life insurance policies. 
2. Then there are health insurance policies which provide the much needed medical expenses in case of hospitalization. Tax deductions are applicable under Section 80D for these health insurance policies.

Why avail only tax benefits when you can probably get more benefits? And that can be done easily by allocating the stipulated amount carefully. A term plan is a must for securing your family. A ULIP is long term investment plan for fulfilling future goals like children’s education or marriage. A pension plan lets you live comfortably at later days by providing regular income.

Instead of getting a random policy which your colleague or friend chose, consider your requirements and make the right decision. Tax benefits will be there whichever policy you choose.

Health insurance policies are becoming one of the most demanded insurance policies in the market and that too for a good reason. Medical expenses are on exponential rise and having a health insurance policy secures you financially to get the best healthcare treatment.

Consider the complete situation holistically. The insurance you have, whether it is enough and which insurance policies you should buy to seal the deal. Widen your portfolio instead of just taking one or two insurance policies. Get completely secured by having enough coverage of both life and health insurance policy.