General Insurance Types and Its Tax Benefits
Nothing in life is as unpredictable as life itself. While you might be hale and hearty now, you never know what might happen next. From hospitalisation, natural disaster, car theft to burglary and riots — there are just too many ways for things to go wrong when you least expect them to.
Apart from the emotional turmoil, these events often drain you and your family financially. While the emotional pain can never be compensated for, a General Insurance policy can at least keep you financially protected.
What is General Insurance?
Insurance products are generally of two types — Life Insurance and non-Life Insurance. A General Insurance policy falls in the latter category. It is an insurance product that does not cover life. It can be a Health Insurance, a Car Insurance, Two Wheeler Insurance or a Travel Insurance.
Let us take a detailed look at some of the most popular types of General Insurance products and their tax benefits:
1. Health insurance
Increasing work stress and sedentary lifestyles affect our health negatively and can result in a medical emergency anytime. With the rising cost of healthcare, Health Insurance is now of utmost importance. There are now many types of General Insurance policies for health designed for individuals, families, medical surgeries, accidents, accidental disabilities and more.
Tax Benefit: Of all the different types of general insurance in India, tax benefits are most synonymous with Health Insurance. The premium that you pay for your Health Insurance is eligible for tax deduction under Section 80D of the Income Tax Act, 1961. The maximum deductible limit is The maximum deductible limit is INR. 25,000 in a financial year for self, spouse and children. The same can be extended up to INR. 30,000 if you are a senior citizen (above 60 years).
Also, the tax benefit of your parents can be added if you are paying Health Insurance premium for them.
2. Motor Insurance
Road accidents can happen in the blink of an eye. Buying a Motor Insurance policy is an excellent way to protect your vehicle financially in case of an accident. As a matter of fact, third-party Motor Insurance is mandatory in India as per the Motor Vehicles Act, 1988.
Apart from the standard third-party insurance for car and two-wheelers, there are now also comprehensive Motor Insurance policies that cover damages and personal accident along with the third-party liability.
Tax Benefit: The premium you pay for Car Insurance is counted as an expense if you have used the vehicle for business purposes. However, if the vehicle is for personal use, you will not be able to avail of any tax deductions for the premium you have paid. In case it is for both personal and business use, the premium — to the proportion to which the vehicle has been used for business — will be counted as a business expense and available for tax benefit.
3. Travel Insurance
Be it business or vacation — your international trip can easily turn into a nightmare if you lose your passport, baggage, suffer from a medical emergency or if there is a flight delay or cancellation. To keep travellers protected from such contingencies, Travel Insurance policies are now available.
Also known as Visitor Insurance, they are one of the most popular types of General Insurance products and are available for individuals, families, students and senior citizens. You can purchase Travel Insurance for a single trip as well as for multiple trips.
Tax Benefit: Just like Motor Insurance, there are no direct tax benefits for Travel Insurance premiums. However, if you are travelling for business, you may count Travel Insurance premiums as a business expense and avail of tax benefits from any such expense.
4. Home Insurance
Your home is probably the biggest purchase of your life. Needless to say, you’d always want it to be protected. Home Insurance is an easy way to keep your home financially protected against man-made and natural disasters. You can buy a Home Insurance policy to protect the structure of your home or its contents, or both. Home Insurance products generally offer protection against fire, lightning, riot, explosion, earthquake, burglary and a number of other devastating events.
The home insurance products generally offer protection against fire, lightning, riot, explosion, earthquake, burglary, and a number of other devastating events.
Tax Benefit: Home Insurance premiums are not available for any tax deductions or tax benefits.
Stay Prepared for Life’s Surprises with a General Insurance
Now that you know about General Insurance and its types, it is time you start looking for one as per your requirement. Before purchasing it, go through all the terms and conditions of the policies and compare them online to make a smart decision.
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