Written by: Shagun Verma | Insurance Advisor
Reading time: 5 minutes
Quick Summary
| Question | Answer |
|---|---|
| Can I claim 80D deduction in New Tax Regime? | Generally No for regular health insurance premiums |
| Should I still buy health insurance? | Yes – protection is far more important than tax savings |
| What if I already have health insurance? | Keep it. Never cancel for tax reasons alone |
| Are family floater plans still useful? | Absolutely. Medical costs are rising fast |
Introduction
Every year around tax filing season, especially in March, the same doubt comes up again and again:
“If I choose the New Tax Regime and can’t claim the Section 80D deduction, does it still make sense to buy health insurance?”
The answer is a clear YES.
Health insurance is first and foremost a protection tool – it protects your family from huge medical bills that can wipe out years of savings. The 80D tax deduction (available only in the Old Tax Regime) is just a helpful extra benefit, not the main reason to buy it.
Current Tax Rules (February 2026)
- Old Tax Regime: You can claim Section 80D deduction for eligible health insurance premiums:
- Up to ₹25,000 for self, spouse, and dependent children
- Additional ₹25,000 for parents (below 60) or ₹50,000 for senior citizen parents
- Preventive health check-up up to ₹5,000 (within the above limits)
- New Tax Regime (default since FY 2023-24): Standard Section 80D deduction for regular health insurance premiums is not available. The New Regime offers lower slab rates but removes most common deductions (including 80C and 80D for typical policies).
- Flexibility: Most salaried individuals (without business/professional income) can choose Old or New Regime every year while filing returns. You can switch based on what saves you more tax each year.
But here’s the key point:
Your health insurance decision should never depend on which tax regime you choose. Health protection is a separate priority from tax optimization.
5 Strong Reasons to Buy Health Insurance Even in the New Tax Regime
- Medical Inflation Is Very Real
Healthcare costs in India have been rising at 10–14% per year (higher than general inflation of ~4–6%).
A ₹5 lakh surgery today can easily become ₹10–12 lakh in 8–10 years. One serious hospitalization can destroy years of savings. Insurance shields your savings from this reality. - Health Emergencies Don’t Check Your Tax Regime
When you or a loved one needs emergency treatment, heart attack, accident, cancer, pregnancy complication, the hospital does not ask:
“Are you in Old or New Regime?”
They only ask: “Can you pay?”
Health insurance often turns that answer from “No” to “Yes”. - Cashless Hospitalization Is a Lifesaver
In network hospitals, you don’t pay upfront. The insurer settles directly with the hospital (subject to policy terms).
This removes the stress of arranging ₹3–10 lakh at 2 AM while dealing with doctors and worry. - You Can Switch Tax Regimes – But Insurance Continuity Is Fragile
Tax regime choice is flexible (you can switch yearly).
But health insurance continuity is precious:
- Cancel today → fresh waiting periods (2–4 years for pre-existing conditions)
- Higher premiums when you buy again (you’re older)
- Possible exclusions or rejection if new health issues arise Don’t break a good policy for a short-term tax decision.
- Tax Benefit Is a Bonus, Not the Core Reason
Think of 80D like a small discount on your car insurance for wearing a seatbelt.
You don’t stop wearing the seatbelt just because the discount ends.
You wear it because it protects you in a crash.
Health insurance is the same: protection first, tax saving second.
What Should You Do Right Now?
If you don’t have health insurance
- Buy it immediately – for protection, not tax saving.
- In metros: Aim for at least ₹10 lakh coverage (base + top-up).
- In smaller towns: At least ₹5–10 lakh (adjust based on hospital costs).
- Consider family floater for self/spouse/children + separate cover for parents.
If you already have health insurance
- Renew on time – never let it lapse.
- Review sum insured – has it kept up with medical inflation?
- Don’t cancel just because you’re in New Regime.
If you’re confused about tax regime
- Use a reliable calculator or consult a CA to compare Old vs New based on your income and deductions.
- Choose whichever regime gives lower tax – but keep your health insurance separate.
Final Verdict
Health insurance is essential in both tax regimes.
The New Regime removes the standard 80D deduction, but it does not remove the reality of rising medical costs or the risk of a ₹10–25 lakh hospitalization.
Protect your family first.
Optimize taxes second.
Never mix the two.
Need Personalized Help?
I’m Shagun Verma, Insurance Advisor based in Himachal Pradesh.
If you’d like a free 15-minute clarity call to:
- Review your current health insurance coverage
- Understand how much coverage your family really needs
- See how insurance fits into your overall financial and tax planning
Just WhatsApp “HEALTH” to 7651032666 or visit lifeinsuranceadvisor.in
No sales pressure – just education and clarity.
Important Disclaimer
– This article is for educational purposes only and does not constitute insurance, investment, or tax advice.
– Tax rules (Old vs New Regime, Section 80D, etc.) are subject to change through future Budgets and amendments.
– Insurance policies are governed by their terms, conditions, exclusions, and limitations. Always read the policy document carefully before purchasing.
– Consult a qualified Chartered Accountant for personalized tax advice and a licensed insurance advisor for protection needs.
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