Is it wise to split the health insurance premium? – Everything you need to know
Ever heard of splitting health insurance premium? It is a great way of getting maximum benefit on tax saving. You already know that health insurance is important to safeguard your savings in times of medical emergencies. When it comes to premiums, we always look for a way to save the most. And splitting health insurance premium with your partner can be a great alternative to this. Let us tell you how:
Insurance premium amount paid by the policyholder is deducted from the taxable income while the premium paid by the policyholder’s spouse or any family member does not come under the taxable amount. So, by splitting the premium amount, one of the spouse can claim for deduction for the premium paid by them.
Does this mean you and your spouse need to buy separate policies for claiming deductions in your individual tax returns? No, you don’t need to purchase separate policies.
Similarly, there is no such restriction on splitting the premium amount. In such a case, it is only necessary that the insurer splits the premium themselves when issuing the insurance policy.
Filing tax with the split premium pay option
Now, if you have opted for the split premium pay option, here’s something you need to know:
You can claim tax under the Section 80D for health insurance premiums. But it is only allowed when the sum of all deductions is less than or equal to Rs. 1 lakh. (it should not exceed this limit). In case the amount exceeds the limit of Rs. 1 lakh, you will be taxed for 20%.
Section 80D governs tax benefits for health insurance premiums. A deduction of about Rs. 25,000 is allowed on the health insurance premiums. This deduction is applicable to both individual as well as family health insurance policies. It is allowed for the taxpayer, spouse and dependent children.
What are the documents required for claiming tax benefits?
There are a very few documents required for claiming tax benefits. Check details below:
- A letter from the employer of the policyholder, stating that their employee is paying the amount regularly and has given consent to deduct the premium amount from their salary account.
- An affidavit from the employer’s spouse is required to confirm that they have allowed the premium amount to be deducted from their salary.
- Lastly, a clear copy of the policy document with declaration page.
We hope you now have a clear idea of how splitting insurance premium works, and why it can be a wise option to choose. If you want to know more or explore insurance plans, you can visit our Bajaj Finserv App.
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