Know about the Benefits of a Multi-Year Health Insurance Policy

Everybody would agree that healthcare is becoming more expensive than ever before. To complement this, the number of diseases and illnesses has been rising, especially due to lifestyle changes. With this increase in illnesses comes along an increase in medical expenses. This is where health insurance can help you better manage and mitigate your financial expenses when it comes to healthcare.

The benefits of health insurance cannot be emphasized enough. One of the major concerns when it comes to healthcare expenditure is the unusual amount of expenses that come along with any medical test or procedure. However, with a health insurance plan, you get the best healthcare without burning out your entire financial capacity, be it an individual health insurance plan or a family health insurance plan. However, one of the main concerns for many is that health insurance comes at a high price. That may not be true as there are several affordable health insurance options.

Importance of Health Insurance Policy

As healthcare costs are rising abruptly, so does the need for health insurance. One of the main reasons why several individuals resort to a health insurance plan is to get themselves covered in cases of health emergencies. Purchasing healthcare insurance can also be pocket-friendly as it requires you to only pay a small amount of premium compared to the high-cost coverage it provides.

With a health insurance plan, you can mitigate your expense in several areas like doctor’s consultation fees, medicines, treatments, surgeries, hospitalization expenses, and many more. With a range of these services covered, your medical expense is bound to reduce.

Benefits of a Multi-Year Health Insurance Policy

1. Lock in your Premium

In current times, the price of almost every product or service increases by the day. With such an increased level of inflation, it is only fair for the prices of the premiums on health insurance policies to rise. Multi-year healthcare insurance policies help combat this rise in the price of premiums. One main advantage of choosing a multi-year healthcare insurance policy is that you have to pay a lesser premium amount comparatively.

In this way, a multi-year healthcare insurance policy locks the premium amount for a longer period of time at a fixed rate. So, you would have to only pay a lesser amount as a premium compared to other healthcare insurance plans.

2. Avail Tax Benefits

While many individuals only focus on the lump sum of a health insurance premium amount that has to be paid initially while purchasing a multi-year health insurance policy, the tax benefits are often neglected. You can claim tax deductions on your premium proportionately.

Earlier, the tax deduction limit was only Rs. 25,000 according to Section 80D. But, when it comes to multi-year health insurance policies, the government has agreed to offer a proportionate tax deduction as the premium paid is much higher. For example, if you pay a premium amount of Rs. 60,000 for a 2-year health insurance plan, you will be able to claim tax benefits of Rs. 30,000 each year.

3. Get Premium Discounts

Most multi-year healthcare policies offer a discount on the premium upon purchasing the same. So, without having to renew your healthcare policy every year, you can also enjoy savings every year from the discounts offered on the premium amount.

4. No Annuals Renewals

One of the main pain points when it comes to general healthcare policies is that the plan has to be renewed every year. This process can become difficult and tiring for many due to their busy schedules. With a multi-year healthcare insurance policy, this is no longer a concern.  A multi-year healthcare insurance policy completely wipes out your need to renew your policy every year, thereby making it more convenient than regular health insurance plans.

What Should you be Cognizant of Before Purchasing Multi-Year Health Insurance?

Ensure that the multi-year health insurance plan you purchase has the following benefits:

1. High Coverage

Ensure that you choose an affordable health insurance policy that offers high coverage for the premium you pay. Make sure that the coverage offered would be sufficient for you, including cases of emergencies. The best way is to look for a multi-year health insurance plan that offers high coverage while not comprising the benefits.

2. Pre and Post-Hospitalization Cover

Some multi-year health insurance plans may not include pre and post-hospitalization expenses. So, ensure to always check if your plan covers expenses such as medical tests, doctor fees, ambulance charges, consultation fees, etc. With an existing health insurance plan, you can claim pre and post-hospitalization expenses.

3. Easy Claim Process

It is always easier if your claim process is as smooth as you would not have to follow extensive steps to claim your tax benefits. So, ensure to research before purchasing a multi-year health insurance claim and enquire about their claim process.

How to Claim Tax Benefits on Premiums for Multi-Year Health Insurance Plans

In many cases, especially when the expiry of your health insurance policy is nearing, you may consider purchasing a multi-year health insurance policy through a single premium. Sometimes, the single premium amount to be paid may exceed the tax deduction limit of the health insurance policy. However, that shouldn’t be a concern when it comes to multi-year insurance plans, as the tax deductions can be claimed proportionally to the term of the policy.

One of the most appreciated perks of tax benefits when it comes to multi-year health insurance plans is that you can claim up to Rs. 25,000 of tax to be deducted every year. This applies to the health insurance premium you’ve paid for yourself, your children, and your spouse. Besides, you can claim an additional tax deduction of Rs. 25,000 for the premiums you’ve paid for your parents.

However, you can claim a higher amount if your parents are senior citizens. In such cases, you can claim an extra tax deduction of Rs. 50,000. This would result in a total deduction of Rs. 75,000 on premiums paid for your parents if they are senior citizens.

Especially while it pertains to multi-year health insurance policies, insurance companies allow you to claim your tax deductions proportionately. For example, consider you pay Rs. 50,000 for a 2-year health insurance policy. In this case, you will be able to claim Rs. 25,000 as your tax deduction in the first year. However, to claim tax benefits, ensure that you do not pay your premium by cash. You can use any other payment mode such as net banking, credit card, debit card, etc.

Conclusion

It is best to avail of a multi-year health insurance plan at the earliest to save medical expenses and also claim tax benefits. Making claims for a tax deduction can save you from further financial expenses. It is also crucial for you to choose the right health insurance before buying health insurance plans. Certain parameters have to be considered to get the best health insurance policy. Purchasing a health insurance policy can help provide coverage of medical tests, treatment, and hospitalization expenses while also availing of tax benefits.