What are the tax benefits of health insurance?

Health insurance is one of the most important requirements for a family today. With the rising costs of quality medical treatment, health insurance is one way to ensure the family savings are protected. Health insurance in India does not enjoy a lot of popularity because people consider it to be a dead investment since it does not show any return. However, it often times pays for itself especially in times of medical emergencies.

How does a health insurance policy work?

Under health insurance plans, a premium is paid to cover the cost of hospitalization. Pre and post hospitalization spends, doctor consultations, day treatments such as cataract surgeries etc., ambulance spends are included depending on the type of health insurance policy. In case a person has to be hospitalized, the insurance company can directly pay the cost of treatment up to the sum assured to the hospital. Health insurance companies generally tie up with hospitals to allow cashless treatment. In other cases, bills for medical expenses have to be submitted to the health insurance company and these are then reimbursed.

Tax benefits of health insurance plans:

Health insurance can protect a family’s savings from medical expenses. To improve the coverage of health insurance India gives an Income Tax deduction for premiums paid for health insurance plans. This deduction can be availed under Section 80D of the Income Tax Act.

This deduction is available in two parts:

• Health insurance plans taken for self, spouse, and dependent children
• Health insurance plans taken for parents of self or parents of spouse

The limit for each category is Rs. 25,000. However, if the parents are senior citizens, then this limit is increased to Rs. 50,000. If the policyholder himself or herself is a senior citizen, then the benefit is Rs. 50,000. Thus the maximum deduction available under this section is Rs. 1,00,000 in case both categories of health insurance plans are for senior citizens.
This deduction for health insurance policy is available if the premium is paid through the following modes:
• Credit or debit card
• Cheque
• Wallets/UPI
• Net banking or mobile banking

Thus any premium paid in cash is not eligible for a deduction under Section 80D of the Income Tax Act. Also, a health insurance policy purchased for any other relative or grandparents is not allowed as a deduction.

Any amount received under a health insurance policy for hospitalization or reimbursement of medical expenses is not chargeable to tax since it is treated as a reimbursement of medical expenses and not income. However, any receipt under Section 80D affects any deduction taken under Section 80DDB (deduction for medical treatment for specified diseases). It is important to read through the sections carefully while availing these deductions.

What are the tax benefits of a life insurance policy?

Life insurance is one of the key investments that a person can make to ensure the financial security of his loved ones. Life insurance provides an umbrella to protect the insured’s family from any sort of unexpected losses. There are different types of life insurance plans for different goals:

• Endownment plans where a fixed sum is received on maturity of the policy
• Term insurance plan where the sum insured is paid out on death
• ULIP or market linked plans to build a corpus for child education

But another advantage of life insurance is that when you buy life insurance, you also get tax benefits.

What are the tax benefits of a life insurance policy?

A life insurance policy has two different tax benefits. On investing in a life insurance policy, you get a deduction under Section 80C of the Income Tax Act. This deduction is restricted to Rs. 1,50,000. However, the precondition to availing this deduction is that the annual premium paid should not exceed 10% of the sum assured on the life insurance policy. For policies purchased before 1st April 2012, the annual premium paid should not exceed 20% of the sum assured. If the premium exceeds this percentage, then this deduction under Section 80C will not be allowed.

Another important point to consider is regarding surrender of a life insurance policy. The IRDAI has simplified rules related to surrender of life insurance policies. Life insurance policies can be surrendered at any time. However, if a ULIP is surrendered before the completion of 3 years or an endowment plan is surrendered before the completion of 2 years, this deduction will be withdrawn and the amount allowed as a deduction will be considered to be income for the year.

Any amount received on an insurance policy is exempt under Section 10(10D) of the Income Tax Act. Exempt income means this income is not considered to be a part of taxable income for the purpose of filing an Income Tax return. However, for these receipts to be considered as exempt, they need to meet the condition with regards to life insurance premium i.e the life insurance premium needs to be 10% of the sum assured. For policies taken before 1st April 2012, the number stands at 20%. If the annual premium paid out is not within this limit, then the receipts from a life insurance policy will not be exempt. It is very important to ensure these conditions are met to avoid any problems with assessments in the future.

The tax benefit available to a person depends on the amount of deduction and the tax bracket in which the person falls. Depending on these two factors, the tax saved can be calculated.

What are the benefits of travel insurance?

One of the mandatory requirements for people planning a trip abroad is travel insurance. Travel insurance is so important that several countries require mandatory travel insurance during visa applications. Taking travel insurance for domestic travel is also recommended. International travel insurance primarily covers the cost of medical treatment up to a particular limit along with other losses associated with travel.

But why is it so important?

Here are some benefits of travel insurance:

1. Wide coverage against losses and expenses:
Travel insurance is recommended because of the exhaustive coverage provided against different types of losses and expenses that a traveller can incur. Some of them are:

• Accidental death and dismemberment
• Accident and sickness medical expense reimbursement
• Dental care expenses
• Emergency medical evacuaton
• Repatriation of remains
• Baggage delay
• Checked baggage loss
• Loss of passport
• Flight delay
• Hijack
• Emergency cash advance
• Fraudulent card charges
• Home burglary
• Trip cancellation
• Trip curtailment
• Missed connection/Missed departure
• Bounced hotel/airline booking


2. Network hospitals:
Often, insurers have tie ups with network hospitals even abroad for medical treatment. This helps in ensuring speedy treatment with minimal hassles. Having travel insurance cover can assure the traveller of getting treatment in good quality hospitals that have a tie up with the insurer.

3. Available for people of all ages:
Travel insurance is available to people of all ages, whether it is a newborn baby or a senior citizen. Though the premium for each traveller may not be the same, however, it is possible to cover people of all ages. Some travel insurance companies also offer family floater policies where policies can be taken for the entire family’s travel.

4. Online purchase:
It is very convenient to buy travel insurance online. Most general insurance companies offering international travel insurance offer this directly online. It is also possible to buy such policies on insurance aggregators where information about the policy offering and the policy cost can be compared. Buying online is simple and the policy is delivered to the customer’s mailbox immediately after purchase.

5. Customer support:
One of the benefits of having international travel insurance is the customer support in the language of the traveller. If there are any problems during travel, connecting with a customer executive can help quickly sort out queries and problems. Travel insurance companies generally provide consultation and help when it comes to hospitalization, medical treatment, baggage loss, thefts, loss of travel documents etc. It is possible to take help from these executives and ensure all formalities are properly completed.

What are the benefits of mobile banking?

Mobile banking means using your smartphone to conduct banking transactions. With a digital revolution in banking, banking has moved out of the bank branch to internet banking and to mobile banking. Indian mobile banking is offered by most of the banks. Each bank has its own mobile banking application for smartphones which offer a variety of services. It is possible to conduct banking transactions in a matter of a few clicks.

With easy to use interfaces, Indian mobile banking is seeing a rise in transactions as compared to branch banking and internet banking. Customers use mobile banking services for their basic banking requirements.

Here are the benefits of mobile banking:

1. Easy to use:
Mobile banking is extremely convenient and easy to use. Banks provide a lot of instruction and there are videos and blogs online to help beginners transition into using mobile banking. The interface is friendly with a lot of prompts from the application when a particular service is selected. This helps people who are first time users as well.

2. Convenient:
Mobile baking services help to improve a customer’s convenience. It is possible to transfer funds, receive payments, check balances, open fixed deposits, open recurring deposits, pay utility bills, make investments etc from a mobile banking application. This provides a wide range of services to the customer.

3. Secure:
Indian mobile banking applications come with a login based on the customer Id and a PIN. Most banking apps require the password or PIN to be changed at regular intervals. These apps automatically log out a customer if the app has remained idle for a long period of time. This makes it secure to use mobile banking. These apps also prompt the user before confirming any transaction. Sometimes, if a particular transaction is not similar to the user’s past use of the application, the mobile banking app confirms the transaction through an OTP. These additional measures of security make mobile banking secure.

4. Increased mobility:
Mobile banking provides true mobility to the customer since transactions can be done on a smartphone. It isn’t necessary to sit on a desktop or a laptop or even have high speed internet. Fund transfers can be done using IMPS at any point of time even with low internet connectivity. These facilities have made Indian mobile banking very useful.

5. Instant services:
Mobile banking and internet banking have the advantage of providing instant services. Balances can be checked immediately. Fixed deposits can be opened or liquidated instantly. Funds can be transferred immediately using IMPS or UPI.

What are the benefits of buying insurance online?

Insurance is one of the most important investments that a person can make. There are different types of insurance policy that cover different risks for a person. Some of the types of insurance policy that a person can get are:

• Life insurance
• Health insurance
• Two wheeler insurance
• Car insurance
• Home insurance
• Travel insurance

With the digital revolution, the insurance sector has also undergone a transformation. Buying insurance from an agent is no longer the norm. Getting online insurance has gradually become accepted among the masses. Buying insurance online has also become easier with different insurance aggregators that provide quotes and sell different types of insurance.
Here are the benefits of buying insurance online:

1. Comparison between insurers:
One of the best advantages of a digital revolution in insurance is insurance aggregators. Insurance aggregators are websites authorised by the IRDAI to display insurance quotes from different insurance companies. It is no longer necessary to rely on an agent to tell you quotes for different companies. You can check the premium amounts and the inclusions online on an aggregator website and either book through the aggregator or directly through the company.

2. Discounts from insurers:
The quotes for online insurance turn out to be cheaper than through an agent because the company does not have to pay the agent’s commission. Companies also have different offers and schemes from time to time to try and get customers to book their insurance policies online. Insurers also offer discounts to customers that book online.

3. Immediate policy issuance:
One of the advantages of booking insurance online is that the policy document is immediately sent over by the company. There is no delay in getting it. Since there is an electronic version of the policy, that makes it convenient to store as well.

4. Different payment modes:
Buying different types of insurance online has an advantage because it offers different payment modes. You can pay via net banking, your credit or debit card, UPI, wallets or even pay each month. These different options are available every time you book a policy or renew it. This gives you a lot of flexibility to choose the right mode for your needs.

5. Convenient renewal: 
It is very easy to renew a policy purchased online. It can be done from the company’s website itself. Another thing to remember is that a policy bought offline can be renewed online as well. This works for policies purchased from agents.

What are the benefits of a recurring deposit?

A recurring deposit is a type of deposit in which a fixed sum of money is invested at fixed intervals of time. This money accumulates and is redeemed on the same day. To put it simply, a recurring deposit is like multiple fixed deposits that all mature on the same day.

Like the FD, RD is also a popular investment option for people. Here are some of the benefits of a recurring deposit:

1. Small savings option for people:
Most banks have a minimum recurring deposit amount as Rs. 500 which makes it possible for anyone to open an RD account. Some banks have Rs. 1,000 as the minimum first deposit followed by Rs. 500 as the recurring deposit amount. Opening a recurring deposit is very simple and can be done at any bank branch.

2. Can avail loans against RD:
A recurring deposit also works as an emergency fundraising tool. While the bank may not always allow premature withdrawal against an RD, however, it is possible to take a loan against an RD up to 80% or 90% of the amount of the RD. This makes it useful whenever funds have to be raised in an emergency.

3. Useful for goal based savings:
One of the main benefits of a recurring deposit is the use of this deposi to raise funds for a particular goal. Recurring deposits can be opened for a minimum of 6 months and using the time period of a recurring deposit, funds can be invested at regular intervals to build up to a particular goal say meeting child’s education expenses, or to save for purchase of a consumer durable or a car. The recurring deposit acts like a disciplinary tool for the investor by forcing him to invest a fixed amount on the same day for a fixed period of time. This discipline can be used to save for short term goals and earn a small amount of interest.

4. Online recurring deposit booking:
An RD can easily be booked online just like an FD. It can be done via net banking or mobile banking in a matter of a few clicks. This makes it convenient for a person to plan his finances.

5. Recurring deposit calculator:
It is easy to find out the maturity value of an RD and the interest earned by using an RD interest calculator. This calculator will tell you the maturity value of an RD when you input the deposit amount and the tenure. By using an RD calculator, a person can plan exactly how much he needs to invest so that he can get a particular sum of money on maturity. Using a recurring deposit calculator is very easy and it helps to make the best financial planning decision.

Loan Against Property: 5 things you need to know

Businesses need funds for their growth and expansion at all times. In case a business is not eligible for a business loan but they own property, another option they have is a loan against property. This type of loan is also an option for homeowners who are looking for funds.

Loan against property is a type of loan in which any property is put up as collateral. This is a secured loan. Since a property is put up as collateral, the loan amount under such loans is quite high.

If you’re looking to take a property loan, here are some things you should know:

1. Unconditional loan:
A property loan is like a personal loan with a lower rate of interest. Since this loan is secured, it is lower risk for the banks and thus commands a lower intererst rate. However, loan against property is an unconditional loan. What this means is that the lender does not put any conditions on the final use of the funds. These funds can be used for any purpose, whether personal or business.

2. Documents required:
Lenders require the following documents for the purpose of a loan against property:

• Property ownership papers
• Income proof (income tax returns, salary slips, bank statements for the past 6 months)
• Address proof (Passport, Voter ID, Aadhar Card, Electricity bill, Telephone Bill, Gas bill, ration card, Property documents)
• Identity proof (PAN card, Voter ID, Drivers License, Passport, Aadhar Card)

With these documents, you need to fill up the form for property loan. In case of a business that is looking out for a commercial property loan, then the income documents need to include the accounts and financials of the business.

3. Eligibility criteria:
Most lenders specify a minimum age of the applicant which ranges from 21 years to 25 years. The maximum age of the loan applicant is between 65 years to 70 years. This means the loan applicant must not reach the maximum age when the loan is outstanding. Both salaried and self employed people are eligible to apply for this loan. Since this is a secured loan, the lender has an element of comfort. However, while scrutinizing the loan application, the lender will be sure to conduct proper due diligence of the loan applicant’s ability to repay the loan.

4. Loan amount:
The loan against property is a secured loan. The value of the loan depends on the value of the property that is mortgaged to the lender. Most lenders will lend between 50% to 70% of the market value of the property. This means it is possible to get quite a high loan amount for such types of loans.

5. No tax benefits:
A home loan is eligible for interest and principal repayment tax benefits. Even though a property loan is a secured loan, it has no tax benefits. However, the purpose for which the loan amount has been used is important. If a commercial property loan is taken to invest and grow the business, then the interest can be charged as an expense.