With many people pursuing a sedentary lifestyle, the dynamics of the health industry has changed tremendously. Owing to these alterations in people’s way of living coupled with several advancements in medical technology, the need for medical assistance has also grown. Nowadays, most complex ailments can be cured by a simple surgery, hence, doctors often recommend surgical procedures as a line of treatment.

In India, medical inflation has outpaced the overall inflation rate. Today, the figure for medical inflation in the country is close to 18-20% and it is a known fact that the health care services offered today cost significantly more than what they did a few years ago.

A study on the rising costs for medical treatments revealed that the frequency of surgeries has gone up and 54% of the total claims received are surgical claims. Another stark difference is the cost factor in medically managed cases as opposed to those surgically managed. It indicates that the surgical treatment for conditions pertaining to accidental injuries, cardiovascular disorders, and obstetrics, to name a few costs 83% more than medical treatment for the same. For example, for cardiovascular-related disorders, the surgical expense occurred in FY 2012-13 was Rs 1,44,387, but it has increased to Rs 1,87,675 in 2013-14 due to medical inflation.

Standard health insurance policies cover a significant part of the medical expenses during hospitalisation. However, this may not always be sufficient. It is no secret that there may be times when the sum insured taken is not sufficient to cover all medical costs and requirements. The reality is that medical costs are rising, so is per capita income, but the rise is at a disproportionate rate. This disparity makes the need for a comprehensive health insurance imperative to protect oneself from an unforeseen financial exigency due to a medical emergency.

Moreover, medical treatment does not simply stop at basic treatment or hospitalisation costs. There are innumerable other factors that add up to increasing the expenses to be borne. Costs such as room rents, private nurse expenses, and non-medical expenses such as travel, food and even loss of income in case of a prolonged duration for recuperation or insufficient leave are some of the key elements that need adequate financial provision. Besides, there is always a chance that any form of surgical intervention could exhaust your sum insured, leaving you without appropriate financial support, in case of any future medical requirement. As an example, you could consider a situation where you may have a cover with a sum insured of Rs 2 lakh, while the cost of treatment incurred is Rs 3 lakh. A situation like this not only leaves you with paying that additional amount out of your pocket, but also without any backing for the future.

Keeping these aspects in mind, there are plans that offer a benefit amount for certain illnesses or surgeries or treatments. These benefit policies assure payment of a lump sum amount that can come in handy not just for treatment, but also for the day-to-day expenses. These policies are built to address the need for costly treatment in case of critical illnesses and major surgeries. Some of these policies provide benefits such as daily cash allowances for hospitalisation to cover up hidden costs, where as the personal accident policies take care of any financial burden resulting from the loss of income due to disability. In case you already have a basic hospitalisation reimbursement plan, you should consider a benefit plan for a specific treatment or certain critical illnesses.

A benefit policy is the perfect financial solution to handle all health-related problems as it gives you the space to plan your finances and surgery in advance.

The author is Head- Health Insurance, Bajaj Allianz General Insurance. The views expressed in this article are his own

I have a two-year-old daughter. My relatives used to give her cash gifts on various occasions. Though individually it is a small amount, the collective sum becomes a considerable amount per annum. What will be the tax implications on this sum? Do I need to mention them while filing my returns? Can I deposit this amount in a Public Provident Fund (PPF) in her name or a fixed deposit (FD) or a Kisan Vikas Patra (KVP)? If yes, what will be the tax implications? — Kamal Kumar Reply to your query is based on the presumption that such gifts were received from the relatives who are specified in Section 56(vi) of the Act. In such a case, the gifts received are not to be clubbed with your income. However, if these are invested anywhere, the income from such investment would be clubbed with your income. In case the amount has been deposited in her bank account, the interest earned on such deposit will be clubbed with your income.You can open a PPF account on the behalf of a minor of whom you are the guardian. You can deposit the cash gifts amount in her PPF account. The amount of interest earned in such account being exempt from tax and it would not be clubbed with your income. The income (interest earned ) from FDs or from KVP would also be clubbed with your income as per the provisions of Section 64(1A) of the Act.

My mother has been receiving pension every month after my father’s death. How will it be taxed? — Ramesh Kumar

The pension your mother is receiving would be taxable as family pension under the head "income from other sources". As per Section 57 (iia) of the Income Tax Act, 1961 (The Act), in the case of income in the nature of family pension, the lower of one-third of the pension income or Rs 15,000 is allowed to be deducted from income. The net amount of the pension would be clubbed with your mother's total taxable income, if any. She will be chargeable to tax in case her total income for financial year exceeds Rs 2,00,000. In case she is a senior citizen, she will be liable to pay tax in case her total income exceeds Rs 2,50,000.

I joined a company in March. The tax liability from my previous employer was Rs 50,000. How do I calculate my total tax liability? — Sanjeev Kumar

You need to report your salary income from the previous employer to your current employer. The tax liability would be calculated on the aggregate salary from both employers. Also, the benefit of the income-tax slab would be given on the aggregate of both salaries and not individually.

It is important for you to check your home loan eligibility before planning to buy your dream home.

There are certain factors which affect your eligibility. The cost of property that you are planning to buy — the first and foremost parameter— has a direct impact on your loan eligibility. It will indicate your down payment requirement, which plays a major role in arranging funds for buying the property.

Naturally, the bank which finances your house wants you to put in a contribution towards the cost of the house so that you have a stake in its continued maintenance. This also ensures that if the value of the house depreciates in future, the bank’s outstanding loan amount is lower than the market value of the property. Hence, if a house costs Rs 50 lakh, the bank may ask you to fund at least 20% as a minimum down payment i.e. Rs 10 lakh. The stamp duty or registration charges will not be funded by the bank as a package for your home loan. The balance amount (80% of the cost of the house) i.e Rs. 40 lakh will be given to you as a home loan.

Even if your income is enough to justify a higher loan amount, the bank will give you a maximum loan amount based on its margin requirements. For instance, if your income justifies a loan of Rs 60 lakh and you are buying a house that costs Rs 50 lakh, the bank may restrict the loan to the maximum of Rs 40 lakh.

There are certain other factors which may impact your eligibility for a home loan. For example, if you are paying EMIs for other loans such as car loan or personal loan, your EMI ideally should not be more than 45% of your take-home salary. If your interest rate is high, your EMI will also be high and it will lead to a lower loan amount and in that case your down payment will be higher.

There are some other factors which may impact your eligibility

Age of the building: Most banks have a cap on the maximum age of the building at the end of the loan tenure. This would normally be 50 years. So, if you are buying a property on resale and the current age of the building is 38 years, the probability of getting tenure higher than 12 years is low, despite the fact that you may otherwise be eligible for a 20-year loan. This reduction of tenure would reduce the loan eligibility.

Unaccounted component: In some real estate transactions, a portion of the cost is not accounted for in any of the documents related to the purchase. Thankfully, this practice is on the decline, especially where the property is bought from reputed builders. No bank considers this unaccounted amount while calculating the cost of the property and determining the loan amount eligibility.

Amenities agreement: Some home buyers enter into a lower agreement value for minimising a stamp duty payment that is applicable on the transfer of property. They sign an amenities’ agreement or a furnishing agreement to account for the balance purchase price. However, such transactions have a direct bearing on the loan amount that a bank will be willing to provide. Most banks calculate the cost of the property after restricting the value of the amenities’ agreement to 20% of the original agreement value of the property. However, if the amenities’ agreement is also stamped and registered, most banks will take the full amount of the amenities’ agreement into consideration. Amenities’ agreements are normally not taken into consideration, if the property is purchased on resale.

Power of Attorney: In some northern states, including National Capital Region, many property transactions are done on the basis of a power of attorney. The seller of the property gives the buyer the possession of the property and the power to deal with the property as he (the buyer) may deem fit. This power of attorney would also give the power to the buyer to further provide such power of attorneys to other people (for other buyers in future). Most banks do not encourage such transactions since the ownership is under suspicion in such cases. Such transactions are normally made to save charges payable to the development authorities, stamp duty and registration charges. Home loans to buy such properties may be available from a restricted list of lenders, who may also lend at higher interest rates.

But, there are ways by which you can increase your eligibility such as add a co-borrower and also consider clearing your short-term liabilities for which you have taken a loan and are paying EMIs. If there are no EMIs in your salary, your home loan eligibility will be certainly higher.

The author is Chief Editor, ApnaPaisa. The views expressed in this article are his own