How Much Health Insurance Coverage One Should Look For?

How Much Health Insurance Cover Should You Have?The deduction limit for health insurance premium under section 80(D) has been hiked from Rs.15000 to Rs.25000 for general public and from Rs.20000 to Rs. 30000 per year for senior citizens. It is a good news for tax payers as they can now get tax exemption for higher amount that they would otherwise compel to spend on their health insurance cover.

Medical expenses are gone up in recent years. Especially in India, medical inflation was running higher than the salary hike in the recent past. Studies show that India has the highest medical inflation in the world and that is really alarming! This reality makes more people to buy health insurance for them and family. There is a considerable increase in health insurance premium in recent years due to rising medical inflation rate in India but that has not deterred these people from buying their health insurance policy. It is true that people need to shell out more money now towards their health insurance premium than before and the earlier limit offered under section 80 (D) is not even half of the premium paid by many families for their cover. This could be one of the reasons to rise the limit up to Rs. 30000.

This is a good move indeed and it will definitely attract more people towards paying higher premium for coverage they actually require. To attract customers, health insurance companies has also come up with some unique features that include premium variants and add-on benefits as optional. These services include reimbursement of vaccination expenses, maternity cover, exemption from earlier sub limits and an option to book high end rooms in leading private hospitals. Though these features can be of very useful to many, not everyone need to opt for it for the simple reason that all of us may not use these added benefits every time.

How Much Health Insurance Cover Should You Have?Policy buyers need to be cautious while buying these type of feature rich policies. They need to analyze their health insurance requirements and then make a careful choice rather than buying policies without a second thought. When you buy these feature rich policy, you are actually buying a product that offer many features which you may not require at this stage, instead focus on the main factor – the ideal cover for you and family.

What are the things that you need to consider when you buy a Health Insurance Policy?

As we know, requirements of each individual and family varies. The type of health insurance cover suitable for a family is depend on some of the main factors listed below:

  • Health history of family member : If you want to include your parents or aged members to be included in the policy cover, then prepare to shell out some extra premium. Health history of parents can impact the insurance premium as well especially when parents has a medical history of diseases like cancer, heart attack or stroke etc. Usually, policy will be issued for children of such parents after a medical check up in the beginning. Extra premium will be loaded based on the medical test results and age of the customer. Check on the facilities offered with feature-rich health insurance policy and make a choice carefully. Choose only those features that are useful to you and family.
  • Life style and preferred hospitals of family members: Life style of policy buyers can have an impact in their health condition which in turn affect their health insurance requirements. Consult with a health insurance specialist and make an appropriate choice of feature that are useful to you or other family members.
  • Premium affordability and the ability to bear the extra expenses in case of sub limits: When you buy a policy with all its features on, its premium rate would be definitely high. It is very important to see that what you can afford. Prioritize your requirements and make a decision accordingly. Make a choice for sub limit options carefully and consider your liability towards it.
  • Place of residence: Medical expenses vary different hospitals located in different cities and towns. Especially in larger metros, if one particular treatment is very expensive there then it is appropriate to go for featured policy so that you get medical coverage from the day one.
  • Nowadays, all major health insurance companies have included a coverage restore feature in their existing health insurance policies. This added feature would restore the entire health insurance coverage utilized in that year. This feature is found to be useful when you have aged parents included in your Family health insurance policy. However, this add-on may not find much importance in case only young people are included in the policy cover.
How Much Health Insurance Cover Should You Have?How much health insurance is required for a family?

This depends entirely on factors like age, location, number of members included, family health history and affordability. In case of a young family that consist of a wife, husband and two kids then start with a coverage 3 lakh or 5 lakh. If you are living in a smaller town, then 3 lakh coverage would be fine  but in case you live in any of metro cities then go for 5 lakh.

Analyze your requirements for the comings years. It would be ideal to increase family cover once in every 5 years irrespective of whether you have used your coverage in the past or not. 40% increase in coverage in every 5 years is recommended in metro cities. This is just an indicative figure. The actual enhancement required for your health insurance coverage is also depend on your past claim history and present health conditions of you and family members. Increasing medical inflation that we witness in each year and a need for higher health insurance coverage due to age increase of family members are the basic reasons for seeking enhancement for anybody’s health insurance coverage.

The best thing that you can do is to evaluate defined benefits and top up plans to enhance protection in such a way that the top up cover would get activated only after your base cover is exhausted.

How Much Health Insurance Cover Should You Have?The other option is to go extra coverage for critical illnesses like Cancer, Stroke or any other heart ailments. This top up coverage provide financial assistance over and above basic hospitalization expenses. This option will protect policy holders from financial distress due to illness and loss of income. You can either go for a Critical illness top with your existing health insurance policy or you can buy a fresh Critical Insurance policy from any Life Insurance or General Insurance company.

Under this policy, the affected person is entitled to get a lump sum amount (sum insured) irrespective of the actual medial expenses, after he/she diagnosed with any of the critical illness included in the policy. This product is really worth to consider especially when you seek coverage for your parents.

Always do your homework before making a choice. Include your health insurance expert in the decision making process. Never buy an idea of taking a policy with maximum cover instead get a cover that you and family require.


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Union General Budget 2015-16 : Income Tax Rates

Union General Budget 2015-16 : Income Tax Rates

Union General Budget 2015-16 : Income Tax RatesFinally our budget for the financial year is out. Finance Minister of India, Arun Jaitley presented the Union General Budget for 2015-16 in Parliament. Though there are few changes in the tax structures, the Personal Income Tax rates are untouched. Here is a broad view on the Income Tax rates set for FY 2015-16.

Income up to 250000   Exempted from Income Tax
250001 to 5 Lakhs 10% Tax
500001- 10 Lakh  20% Tax
Above 10 Lakhs  30% Tax

These rates are applicable citizens of both sex who are less than 60 years old.
Senior citizens who are above 60 years of age are exempted from income tax up to 3 lakh limit instead of 250000. Very senior citizens – who are aged above 80 years – are exempted from income tax up to 5 lakh so they need to pay income tax on income above 5 lakh at the rate prescribed for people in the general category.

The education cess and additional surcharge – known as Secondary and Higher Education Cess – on income tax for the year 2015- 16 are going to be at 2% and 1% respectively. These charges would be levied from all tax payers. HUFs, artificial juridical persons, AOPs, co-operative societies and firms whose income exceed 1 crore are liable to pay 12% surcharge on their income tax amount.

Let us now look at the tax deductions offered in this budget.

  • Section 80C limit is untouched and kept at Rs.150000 limit. However, section 80CCD limit is hiked from Rs. 1 lakh to Rs. 150000 for new pension scheme.
  • There is a considerable change in section 80D on health insurance premium limit. Under section 80D, deduction up to Rs. 25000 is allowed for general category people and Rs. 30000 for senior citizens. The existing rates for general category people and senior citizen people are Rs. 15000 and Rs. 20000 respectively. In case of very senior citizen people no exemption is allowed as of now but they are eligible for a deduction of Rs. 30000 towards medical expense.
  • PAN number is a must for any transaction above Rs 1 Lakh.Union General Budget 2015-16 : Income Tax Rates
  • Sukanya Samridhi Account Deposit Scheme becomes more attractive investments than PPF now as all interest earned from this scheme and maturity amount are exempted from tax. So the investments made under this scheme fall under exempt- exempt – exempt tax category.
  • Income deduction on account of interest on home loan is up to Rs. 2 lakh. Transport allowance exemption limit is hiked in the current budget from its existing limit of Rs. 800/month to Rs. 1600/month.
  • Big hike on service tax rate. It is hiked from existing 12.36% to 14%. This hike is definitely going to effect business of all service sector companies. Wealth tax is replaced by 2% additional surcharge on taxable income above 1 crore rupees. Senior citizens are eligible for service tax exemption on Varishta Bima Yojana scheme.
  • 100% tax deduction on the amount contributed towards Swachh Bharath and clean Ganga activities. Under Section 80U, differently abled people can get deduction up to Rs. 75000. The existing limit under this Section is Rs. 50000. In case of severe disability, the limit remains same at Rs. 1 lakh but it is proposed to hike the limit to Rs. 125000/-


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