I made a health insurance claim during the financial year 2013-14. I received it in the financial year 2014-15. Will this be considered as income for the current year?
A claim received under any insurance policy will not be treated as an income. It is an expense that you have already incurred. Since medical insurance is a contract of indemnity and there is no profit element in the amount of claim received by the insured, the claim received will not be considered as taxable income. Therefore, you need not include it in the income of this financial year while filing your income tax for 2014-15.
How soon do insurance companies clear any death claims? Do nominees have to keep on running for payments?
IRDA regulations clearly state that all claims should be settled within 30 days but if your claim requires any further investigation the insurance company has up to 6 months to make a final call to accept or deny your claim. In the event of any dispute or delay you have the option of taking your case with the insurance ombudsman, who acts as a mediator between you and insurance company for an out of court kind of resolution.
Hi Dhanya! Thanks for your replies. In case of Sourav, he got the reimbursement in the next financial year. If I get it in the same financial year, is it still tax-exempt? Which section of the IT return should I claim exemption in?
Most of the time a Health Insurance pay-out is only a reimbursement of the expenses that you have incurred. It is not deemed to be income or profit for the individual. Therefore it is not subject to taxation. This is irrespective of which year you made the claim and when you were reimbursed. So, you don’t need to include it as part of your taxable income.