The necessary insurance

While life insurance isn't meant for everyone, there is one type of insurance which we all must buy: health insurance. Medical emergencies can severely impact our financial goals. Health insurance usually provides either direct payment or reimbursement for the expenses associated with illness, injuries and hospitalisation, as detailed in the scope of the policy cover. The cost and range of protection provided by a health insurance policy depend on the insurer and the type of policy purchased by you. Some policies also cover pre- and post-hospitalisation expenses.

Health insurance is typically an annual contract and the premium paid is tax deductible. Section 80D of the Income Tax Act allows deduction of health insurance premium of up to Rs 25,000 for insurance of self, spouse and dependent children. Additionally, a deduction of up to Rs 25,000 is available for buying health insurance cover for parents. However, for senior citizens, premiums are deductible up to an enhanced limit of Rs.50,000.

In today's highly stressful and fast paced life, health insurance has taken many independent forms, which were earlier offered as riders. These are indeed important and you must consider them as well. A couple of such insurance are personal accidental insurance, cancer protection and critical illness insurance. A personal accidental cover provides compensation in case of a disability and accidental death. A critical illness cover is meant for serious diseases which result in very high expenditures and which are not covered in normal health insurance. Even if they are, the sum assured is likely to fall short of the expenditure incurred.

A health-insurance policy can be bought from individual health insurance agents, banks, insurance brokers or on the internet. Bear in mind that insurers can restrict certain discretionary costs associated with hospitalisation by introducing sub-limits for reimbursement. So, go through the policy terms and conditions thoroughly.