The Budget 2022 has incorporated a slight taxation change in the insurance product for handicapped people, which may be considered as a relief to both the disabled and their guardians.
Previously, premiums paid on insurance policies purchased by parents of differently abled children or dependents qualified for Section 80DD deduction only if an annuity or lump sum was provided to the handicapped child upon the policyholder’s death.
The annuity or lump payment may now be provided to the crippled kid even if the parent is above the age of 60. “It has been recommended that the tax deduction under Section 80DD be offered even if the parent or guardian is alive if he is above the age of 60,”
“Another impact is that payments to the handicapped, whether annuity or lump sum, will no longer be taxed, as they were before.” “However, we need more clarification on this since there is still some doubt,” says Sanjay Datta, Chief of Underwriting, Reinsurance, and Claim at ICICI Lombard General Insurance Company.
“There is a product potential with a welfare perspective here because we can now develop solutions for the handicapped, where the annuity may start not on the death of the father, but when he gets 60,” says Rushabh Gandhi, Deputy CEO of IndiaFirst Life Insurance Company.
READ ALSO: Section 80D – Medical Insurance Deduction
The tax adjustment is as follows, according to Finance Minister Nirmala Sitharaman: “The current legislation allows for deduction to the parent or guardian only if the lump sum payment or annuity is payable to the differently abled person on the death of the subscriber, that is, parent or guardian.” There may be instances when differently abled dependants need payment even while their parents/guardians are still alive. I suggest that an annuity and lump sum payment be made to differently abled dependents throughout the parents’/guardians’ lifespan, that is, when the parents/guardians reach the age of 60.”
Among other health-related developments is the creation of an open platform for the National Digital Health Ecosystem, which will include digital registers of health practitioners and health institutions, unique health identities, and universal access to health facilities.