Pay for your parents’ mediclaim

Niranjan had often in the past complained of the rising cost of health insurance. Every year he pays premium on health insurance for his wife, children and his parents.

This typically costs him over Rs 30,000 per annum. Until recently the maximum exemption that he enjoyed under Section 80D was Rs 20,000. The higher exemption (Rs 20,000 instead of Rs 15,000) was because he paid premiums for his parents who are senior citizens. In this budget the finance minister raised the exemption limit by another Rs 15,000, thereby taking the total deduction to Rs 35,000.

This is expected to result in an additional saving of Rs 3,000-5,000 annually. He should, therefore, continue to pay the premium on his parents’ mediclaim policy.

Reverse mortgage likely to get popular

Also, your parents may now proceed with the reverse mortgage that they have been thinking about, I said. A reverse mortgage is a way of selling your home while you continue to live in it. The bank or finance company pays the owners a regular amount based on the value of their home.

An individual may continue to live in his or her home for a lifetime while receiving this annuity. Upon the demise of the owner the finance company takes over the property. Till recently it was unclear if the annuity received from a reverse mortgage would be taxable in the hand of the recipient. With the finance minister declaring in this budget that such annuities are tax free, this product is expected to gain in popularity.

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