Financial planning is essential. One might implement different strategies to increase wealth using the myriad financial tools effectively. But, a common aspect of financial planning that is observed among all portfolios is a health insurance cover. A health insurance plan not only helps in protecting oneself from financial emergencies of hospitalisation, but also ensures that your savings remain intact.
With the steep cost of medical facilities, a single case of hospitalisation can burn a hole in your pocket. Instead, one can opt to insure against such adversity by investing in a health insurance plan. Therefore, health insurance contributes to wealth sustenance in the form of adding a safety net to your corpus amount.
Health insurance plans enjoy benefits where the cost of hospitalisation is covered. Not only that, but some policies cover the period before and after hospitalisation. It is called pre and post-hospitalisation cover. You may wonder what about the cases where one might not need to be required to get admitted to a hospital for treatment. A good health plan also includes coverage for day-care procedures.
Moreover, some plans specifically protect against life-threatening ailments like cancer, heart attacks and the like. These plans are called critical illness insurance. It ensures you remain financially protected in such times of distress.
While most insurance plans are available for a single year, there are multi-year plans too. A multi-year plan offers you an insurance cover for more than one year. The advantage of opting for a multi-year plan is that you can enjoy a sustained coverage without the hassle of yearly renewals along with tax benefits.
Let us look at how a multi-year health insurance policy offers an edge over a standard annual plan –
A definite amount of Premiums
A multi-year health policy, as the name suggests, provides coverage over a prolonged period. Its cover is not limited to each annual renewal cycle. A short-term health policy that renews annually might increases its premium amount each year. Although this might be a fractional increase, the same is not the case of a multi-year plan. Thus one may benefit from opting a multi-year health insurance plan instead of a single year. Moreover, the premium amount is required to be paid at once. One time payment makes it convenient for the buyer as there are cases of missed renewal dates leading to lapse and loss of continuity benefits to your insurance policy.
Extended Tax Benefits
A health policy is eligible for tax benefit. Whether they are health insurance plans for family or your standard individual health cover, the government has extended the benefits available for payment towards health insurance premiums under Section 80D. This extended benefit can be availed on your multi-year policy as well. The amount of premium paid is available as a deduction in your return of income over the policy tenure. These deductions are subject to the limits specified under the Income Tax Act.
Using a multi-year plan, you need not remember annual renewal dates for your health cover. The premium paid covers for an extended policy duration. Thus, using a multi-year policy, you can save on premiums along with availing tax benefits over the duration of the policy term. Use a health insurance plan as a secure-your-portfolio option rather than looking at it as a return-on-investment option.