Where Do You Invest Your 18% Premium after GST Removal on Health Insurance?

Since the announcement of zero GST on health insurance premiums, you will now save the 18% GST previously paid on the premiums. This also gives you an opportunity to invest your money towards either enhanced coverage or more diversified investment options. Beyond the traditional saving options, this change empowers you to improve your financial planning. Here are some tips for investing your health insurance savings to help you achieve your long-term goal.

Tips for Financial Planning with Insurance Savings

1. Upgrade Your Health Coverage with Savings

   Use the saved 18% GST to upgrade your existing health insurance. You can increase your sum insured or buy a top-up plan to get extra coverage at a lower cost. Our Super Top-up Insurance plan is helpful for large medical bills, especially if your base cover is small. Upgrading now gives you better protection and lowers the risk of paying out of pocket for serious illnesses or surgeries.

2. Equity-Based Investments

   If you're okay with some risk, invest your savings in equity-based options. Stocks offer high returns but need research. Equity mutual funds are simpler and great for long-term SIPs. You can also choose ULIPs, which combine insurance and investment. These are the best investment options for premium savings, as they work well for goals like your child's education or future wealth, along with health coverage.

3. Fixed Income Investments

   For safer returns, fixed income options are ideal. Fixed Deposits (FDs) and Recurring Deposits (RDs) offer guaranteed interest. The Public Provident Fund (PPF) is great for long-term tax-free savings. Debt mutual funds are slightly riskier but may give better returns than FDs. These options help you grow your money slowly without worrying about market ups and downs, perfect if you want stability and security.

4. Invest for Children's Education or Your Retirement

   Use the GST savings to plan for big life goals. For your child, invest in education plans or the Sukanya Samriddhi Yojana (for daughters). For retirement, the National Pension System (NPS) offers steady returns and tax benefits. These investment options ensure you're financially ready to handle future expenses.

5. Buy Personal Accident or Term Insurance

   Use your savings to buy an affordable term life or personal accident insurance policy like the Saral Suraksha Bima policy. These plans cost less but offer high coverage. Term plans protect your family financially in case of untimely death, while accident covers pay in case of injuries or disability. This ensures you're prepared for risks beyond hospitalisation, making your overall financial safety net stronger.

What Should You Consider Before Investing?

Before you decide where to invest health insurance savings from the GST exemption, keep these key points in mind:

• Your Financial Goals: Are you saving for your child's education, a home, retirement, or just looking to grow your money? Choose investments that align with your goals and time frame.
• Risk Tolerance: Understand how much risk you're comfortable with. If market ups and downs make you nervous, consider safer options like FDs or PPF instead of stocks or equity funds.
• Investment Duration: Short-term goals need safe, liquid investments. For long-term goals, equity-based options can offer better growth.
• Liquidity Needs: Some investments, like PPF or ULIPs, lock your money for years. Make sure you won't need the funds urgently.
• Tax Benefits: Look at the tax-saving options under Section 80C or 80CCD while investing, especially if you're aiming to reduce taxable income.
• Diversification: Don't put all your money in one product. Spread your investments across types to balance risk and return.

Conclusion

With the recent zero GST on health insurance premiums, you now have a great chance to save more and secure better health protection. Reliance General Insurance offers affordable, comprehensive health insurance plans with quick claim settlements, a wide hospital network of 10,000+ hospitals and 24x7 assistance. Use your GST savings to upgrade your policy or invest wisely for future needs.

FAQs

Is health insurance a good investment?

Yes, absolutely. Health insurance protects your savings from unexpected medical expenses. Instead of paying large hospital bills, your insurer covers most costs. It's not an investment for returns but a financial safety net that gives peace of mind and long-term financial security.

What is the 80/20 rule for health insurance?

The 80/20 rule means your health insurer pays 80% of the medical expenses, while you pay 20% (called a co-payment). It helps reduce your premium cost but also means you share part of the claim amount. Always check your policy details to understand how much co-payment applies.

Which is better, SIP or health insurance?

Both serve different purposes. Health insurance protects you from medical emergencies, while a SIP (Systematic Investment Plan) helps grow your wealth. Ideally, you should have both, health insurance for protection and SIPs for long-term financial goals like education, home, or retirement.

What is the best age to buy health insurance?

The earlier, the better. Buying health insurance in your 20s or early 30s can help you get lower premiums and fewer health-related exclusions. Younger buyers get wider coverage and can build a strong no-claim bonus in health insurance over the years. Delaying purchase can lead to higher premiums and waiting periods.