Purchasing health insurance will be cheaper this year for the common man, as Budget 2012 has ushered in an era of tax breaks for preventive check-ups.
Life insurance as a savings instrument, on the other hand, will lose its glitz, as the finance minister announced on Friday that in order to be eligible for tax breaks, the minimum cover requirement under a life policy has to be doubled.
AdvertisementIn the meantime, all forms of insurance - health, motor, property and life - will become more expensive as service tax has been increased by two percentage points.
Until now, life insurance was an attractive avenue for accumulating savings for retirement. Now the gains will be vastly curtailed because a big chunk of the premium will go towards life cover.
Those in the higher age group will now find it more expensive to buy a life cover. The tax break of Rs 5,000 for preventive health check-ups will help focusing on preventive health care.
General insurers say there's another benefit - health checks will enable early detection of ailments and enable product innovation in the health insurance industry.