Droplet's Axe the Tax - Tip#2

In Tip#1, We saw what we should not do in the name of tax saving. Today we will see the 1st thing we should do for tax saving.

In a recent survey it was found that people go financially broke or fall in debt trap primarily for two reasons - 1. Wedding 2. Health disease. Today we are going to talk about 2nd point and how tax saving is related to it. 

Like we said earlier, a lot of people are obsessed with Section 80C. People have their obsession, we have ours and it is Health is Wealth. Honestly, In today's world, it is impossible to be healthy, If Diabetes does not catch you, some Heart disease will catch you, If Heart does not then some cancer will, the list will go on... But seldom can we find a person who is 40 plus but all healthy. 

The Proverb -"Health is Wealth" might be cliché but the context has changed. In the sense that almost all ailments today have treatments and can be cured if diagnosed and treated properly. But these treatments cost us our life savings. So from meaning that if you have health you can enjoy wealth, it has come down to If you have wealth, you can buy your health.

Now we are going to tell you simple trick to Buy your health at the same time Save your Wealth as well. The Trick is Buying a health Insurance for you and your family as early as possible. 

Why 80D over 80C - 

Lets do a Data Analysis. Assume that a tax saver chooses to put 50K yearly in some random Investment like Sukhanya Samridhi, HDFC Child Protect, LIC Jeevan you name it policy... 

So as you can see at the end of 10th year, He has around 8 lacs cash in hand as against being covered for 40 lacs for any ailments. So in a case of any health emergency to any of the family members, you know given a chance to choose between the 2, what you will choose. Make a note, in order to have the same 40 lacs in hand, you need to save 2 lacs each year and it has to be liquid & risk free - meaning you can liquidate (have cash in hand) it in a day or two and most importantly without any loss. 

Excuses we give our selves 

Employee Insurance - Most of the tax savers do not buy an insurance since they are already covered by their employee. This is one of the biggest ignorance we all carry. My employer has provided me with sufficient health cover, so there is no need for a separate cover is the biggest myth. First of all, the insurance cover with your employer is very limited. Meaning it would be hardly covered for 5 lakhs a family (in rarest case it would be 15 lakhs depending on the company and your position - at the same time there are companies which doesn't provide health cover at all for all employees). Cost of health expenditure is sky rocketing, 5 lakhs is absolutely peanuts for a family. Mind you the cost inflates in double digits every year. The moment you quit your job, your insurance ceases to exist. You and your family will be insurance less until you officially join the next job. This holiday period turns out to be a bad time if we are hit with health issues. Having adequate insurance all the time is the KEY!      

I am Young/Healthy - This is a thought fallacy because the truth is You are healthy only until you are diagnosed and once you are diagnosed, no one will give you any insurance. Then comes another important thing, The Waiting Period. The 1st time you buy a insurance, You have to wait for 3 years before your insurer covers any existing illness.. Now lets assume you did not have insurance got diagnosed then after paying hefty sums to hospital realize how important is Health Insurance and decide to buy one. Even after this dawning act, you have to wait 3 years, which is long enough to drain your life savings, to get covered. Further the older you and family gets the costlier the cover becomes.. 

So if you have 10/15k whatever.  Instead of investing in tax saving instrument, get a health cover. The pros far too outweigh the cons or any tax saved.

One important advice is,  what our PM says. "Davaai Bhi, Kadaai bhi". Even if you buy your insurance, take care of your health. Give it care and time.

Reach out to us if you are looking for a good health insurance. We will help you in assessing the adequate risk cover & help you choose the right one for you.