Tax benefits not prime motivator to buy health insurance, finds ICICI Lombard survey

On the tax-saving front, over one-third (36 percent) of those polled were not aware of tax benefits associated with health insurance

Majority of health insurance buyers do not consider tax deductions on health insurance premiums under section 80D as the chief motivation for buying these covers, an ICICI Lombard General Insurance survey has found.

The study polled 762 Tier-1 and metro city-dwellers in the age group of 21-55 years who have made at least one tax-saving financial investment, own a health insurance policy or have an intention to purchase one.

The report on tax savings and health insurance says that only 30 percent of health insurance buyers cited tax exemptions as the key reason for buying health insurance. “Cashless claim emerges as the top reason for the intention to purchase health insurance, followed by the protection of savings and managing inflating medical costs. Intentions for health insurance purchase are not solely driven by tax benefits,” the study said.

All about section 80D that offers tax benefits on health insurance premiums

More than 60 percent of those polled relied on friends, family and their bank relationship managers as key sources of information on making tax-saver investments. However, those in the younger age bands (21-35 years) were more inclined to rely on research and information available in the public domain, the survey found. Close to 98 percent of respondents who already have health insurance covers in place said they were likely to renew their policies next year.

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Close to 63 percent of the respondents identified Rs 8,000-30,000 as the optimal annual premium bank for an individual health insurance policy. However, those in the age group of 36-55 years are willing to spend a bit more on premiums. For more than half of such respondents, the lower end of the range was higher at Rs 10,000.

On the tax-saving front, over one-third (36 percent) of those polled were not aware of tax benefits associated with health insurance.

Those under the age of 60 can claim tax deductions of up to Rs 25,000 on health insurance premiums paid towards self, spouse and kids. In addition, individuals can also avail of deductions on premiums paid towards parents’ health policies. Senior citizen (or their children who pay their premiums) are eligible for tax deductions of up to Rs 50,000 on health insurance premiums.