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Health insurance for Parents

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21 May, 2021 by  Kiran Wali

Hi Experts,


I am looking to get insurance for my parents age 65 and 61, both are on medication for BP and Diabetic. They are doing good . I did some research and finalized for MaxBupa reassure. But waiting period is 3 years for aligned disease.


Insurance guy is giving me option, if I pay 3 years Premium at once, he would remove the loading charges.


MaxBupa Reassure is good one ? any pitfall in paying 3 years premium at once ??

don't want to regret later


Thanks,

Kiran



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1 Answer

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21 May, 2021

Hi Kiran,


Max Bupa Reassure is a good product. You can buy it for your parents.


Reassure gives you an inbuilt discount on advance premium payment of 3 years (7.5% on 2nd year premium + 15% on 3rd year premium as per their brochure). But I don't suggest that you pay upfront for 3 years. You could be at a tax disadvantage by doing so. Please mull over the following points and consult your Tax advisor.


1) I did a quick check on Max Bupa website for the premium. The annual premium for a family floater Sum Insured of 10 lacs for your parents age is showing as close to 50 K. The premium for 3 years is showing as 1.57 lacs. Both these amounts are without loading.


2) Sec 80 D of Income Tax Act 1961 allows a maximum exemption of upto Rs 50,000 per year on health insurance premium of senior citizen parents.


3) The additional premium over Rs 50,000 in a single accounting year will not qualify for tax exemption e.g. if you pay Rs 1.5 lacs as advance premium for 3 years in FY 21-22, you'll get Sec 80 D exemption on only Rs 50,000/-.


4) If you are in 20% tax bracket, you will forego 20% tax rebate on the 2nd year premium (against 7.5% discount) and 20% tax rebate on the 3rd year premium (against a 15% discount). This gap will be wider if you already are in 30% tax bracket.


5) You can also expect some growth on your money if you invest it in a good instrument for the next 1 and 2 years instead of paying it as advance to your Insurer.


Please feel free to bounce off the above points with your insurance advisor & tax advisor before you make the final decision.


Best Wishes,

Asad Akbar

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