Budget 2017: Increase tax benefits for senior citizen health insurance

Yahish DahiyaPolicybazaar.comThe year 2016 has been a challenging year for our economy. With the demonetization effect looming large over the economy and the larger implications still to be seen, everyone expects a populist budget this time around. Revamping of tax structure is one of the most predicted changes along with encouragement towards online transactions. Last year, personal accident and term insurance plans were introduced as part of social security schemes and an enhanced limit for tax deduction in health insurance was announced. This time, there are proposals for new health care schemes and promotions of digital payments at every front. We expect government to strike a right balance to address the issue of under insurance and providing relevant product offerings in line with the requirements of the low income households. Below are our expectations from the coming budget.Incentivizing insurance purchase through all online platformsWith the whole demonetisation issue still revolving around, it has been made clear by the government that the focus is on “No cash economy”. The coming budget is also expected to encourage cashless transactions and digital payments. This will also give boost to the online purchase of insurance policies and hence improving the hectic system of buying policy. Recently, government of India has stimulated policy purchase through online portals of public sector insurer by 8% and 10%. This means that the public sector insurance companies can provide discount up to 10% of premium on general policies and 8% on new life policies. But this has been limited to just public sector insurers. In order to encourage digital payments, government should give such incentives to other channels as well for the benefit of both industry and the economy. Other channels of distribution such as aggregators, brokers and agents contribute substantially and influenced significant portion of the insured populationTax Reforms Health insurance plays a crucial role in enhancing the financial security and social protection of citizens. Currently, under section 80D, deduction allowed for medical insurance is Rs 25000 for self, spouse and dependent children and Rs. 30000 for parents whether dependent or not. We expect government to increase deduction limit for parents to Rs. 40000. Nowadays, any decent cover for senior citizens would cost around Rs. 40000- Rs. 50000. This can be further clear with an example of a family floater plan for senior citizens, excluding policy for self Family Floater: Male- 60 years, Spouse- 55 years, Metro City, Sum Assured Rs.. 10 Lakhs ; Assuming there are no pre existing diseases. Premium may vary in case, there is any pre existing illness