Non Life Insurance - How to claim tax benefit on premiums for multi-year health plans

If the renewal date for your health insurance is falling anytime soon, you may consider buying a multi-year policy by paying a single premium. These policies will benefit you as most insurers are currently offering a discount, and you will get locked into the same rate for multiple years, provided you don’t cross the age slab that warrants a change in premiums.

But what if the amount of single premium you pay for a multi-year policy exceeds the tax deduction limit available on health insurance premiums under Section 80D? According to the income-tax law, you can claim the tax deductions proportionately over the policy term.

Under Section 80D, a resident individual can claim a tax deduction of up to 25,000 in a year for medical insurance premiums paid for self, spouse and children, and an additional25,000 for premiums paid for parents. If the parents are senior citizens and you are paying medical insurance premiums, you can claim an additional deduction of up to 50,000—taking the total deduction to 75,000.

If you were to claim tax benefit proportionately, you would get a deduction on half the premium amount or 23,125 in both years. Insurers usually issue a certificate mentioning the amount you can claim each year as deduction.

Source : Live Mint back