Are Critical Illness Insurance Plans Tax-Deductible?

Medical science has positively contributed to improving the life expectancy. While it is the brighter side, a harsh reality looms which is increasing cases of ailments. Once a rare occurrence, has now become common of ailments like cancer, strokes, cardiac arrest, etc. With reports indicate an increasing trend among the population with critical illnesses, the need for a health insurance cover becomes a priority. A health insurance cover helps to mitigate these costs of expensive treatments. Moreover, online health insurance plans further make it easy to compare and choose one as per requirements. There are many insurance covers that you can buy, but a critical illness insurance specifically caters to these life-threatening diseases. Let’s understand more about it –

What is a critical illness insurance?

Critical illness plan differs from a standard insurance cover in terms of the pay-out. Here, the insurer pays a fixed sum if the policyholder is diagnosed with any of the specified critical ailments as per the policy terms. The advantage where this insurance cover comes into picture right after diagnosis make it convenient for the policyholder as well as the dependents to not worry about medical treatment and other procedures. The cost of diagnosis at times can put a strain on your finances. So, this critical illness cover can help manage these costs.

What are the common ailments covered under a critical illness insurance plan?

This policy is specifically designed to cover ailments that can be fatal. The following is a list of commonly included critical ailments –

  • Aorta graft surgery
  • Cancers of varying degree.
  • Coronary artery bypass surgery
  • Myocardial infarction (First heart attack)
  • Kidney failure
  • Any organ transplant procedure
  • Multiple sclerosis with persisting symptoms
  • Permanent paralysis of limbs
  • Primary pulmonary arterial hypertension
  • Heart attacks

What are the features of a critical illness plan?

Flexibility: Critical illness plans are flexible in nature, i.e. you can purchase one depending on your coverage requirements. Depending on your estimate of the treatment cost, insurance companies offer different about of sum insured for your plan.

Family coverage: Critical illness policy acts like a safeguard not only for you, the policyholder, but also your family. These health insurance plans for family provide financial assistance, so your family does not have to face financial hardship or avail debt to fund treatment costs.

100% Pay-out: On diagnosis of the specified ailment, the insurance company pays the entire amount of sum assured as pay-out. This pay-out at diagnosis facilitates no need to seek use your hard-earned savings to avail the treatment

Tax Savings: A critical illness policy offers tax benefit for the premiums paid. This is elaborated in the next section.

Are critical illness insurance plans tax deductible?

A straightforward answer to this question is yes, the premium paid for critical illness insurance is deductible under section 80D of the Income Tax Act, 1961. The premium paid for you, your spouse, children is deductible up to ₹25,000 provided you either of the beneficiaries are not a senior citizen (above 60 years). This same limit extends up to ₹50,000 when any one of the beneficiaries for whom the premium is paid is above 60 years. Deduction is not only available for the premiums paid for your family, but also parents. The threshold is set at ₹25,000 where your parents aren’t classified as senior citizens and extends to ₹ 50,000 in other cases.

The modern-day lifestyle can often lead to these unpleasant health conditions. A critical illness cover is best way to safeguard you and your family and stay secured.

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