Health is Wealth,we have always considered this as an idiom but now, IRDA is all set to add a literal meaning to it. In near future, the Insurance Regulatory and Development Authority (IRDA) can allow a savings-cum-health insurance product. This is directed to charm youth towards health insurance. According to IRDA, presently in India, health insurance products are mainly slanted in favor of older customers as the younger generations don’t usually take health coverage as a priority.
How this would be different from regular health insurance?
This product could be a health insurance plan providing account to the policy holder where they can keep money to save for future medical expenses. The proposed plan differs from a regular health insurance plan, which has no savings component attached to it but only a premium section. The health saving account will offer interest to policy holders, but it cannot be operated as bank account and therefore it would not be necessary for the insurers to wait for a signal from RBI.
How would be the interest planned?
In the health savings account, premium would be distributed into three modules. First component will be reserved for the risk charges for health insurance, second will be for expenditures, and the third will be the savings component.
Is there any additional tax benefit associated?
There will be important tax breaks with this upcoming health saving account. Premium paid for health insurance will now be entitled for exemption under Section 80 D of the I-T Act. Every year, the exemption amount can go up to Rs.20,000.
The concept of saving-cum-health insurance plan is relatively new in India but in several developed countries like US, insurers have been offering such products. With a whopping premium collection of Rs 20,450 crore last year, business in the health segment in undergoing rapid changes, especially after the recent amendments to the insurance act, which now recognizes the health insurance sector as a separate business vertical. The IRDA is expected to take positive decision in this regard very soon.
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