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If the renewal date for your health insurance is falling anytime soon, you may consider buying a multi-year policy by paying a single premium. These policies will benefit you as most insurers are currently offering a discount, and you will get locked into the same rate for multiple years, provided you don’t cross the age slab that warrants a change in premiums.
But what if the amount of single premium you pay for a multi-year policy exceeds the tax deduction limit available on health insurance premiums under Section 80D? According to the income-tax law, you can claim the tax deductions proportionately over the policy term.
Under Section 80D, a resident individual can claim a tax deduction of up to ₹25,000 in a year for medical insurance premiums paid for self, spouse and children, and an additional₹25,000 for premiums paid for parents. If the parents are senior citizens and you are paying medical insurance premiums, you can claim an additional deduction of up to ₹50,000—taking the total deduction to ₹75,000.
If you were to claim tax benefit proportionately, you would get a deduction on half the premium amount or ₹23,125 in both years. Insurers usually issue a certificate mentioning the amount you can claim each year as deduction.
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