If you already have a health insurance plan, but you feel the coverage may not be enough in case of hospitalisation, you may want to boost your health cover. Either you can upgrade your base policy to the one with higher sum insured or you can simply buy a top-up over your existing base policy. The first option could be expensive, but a top-up plan will come at a cheaper premium. By paying a couple of thousands extra, you can have a top-up of Rs 10-20 lakh in addition to the sum insured on your base policy. So, if you have a base policy of Rs 5 lakh sum insured, your total health cover will amount to Rs 15-25 lakh. There are two kinds of top-up plans - standard and super top-up plans. Let's understand the difference:
Standard top-up plan
The standard top-up plan triggers only when the claim is higher than the deductible. Deductible is the minimum amount that either your base health policy will cover or you will have to pay it from your own pocket. For example, if a top-up plan of Rs 10 lakh has a deductible of Rs 5 lakh, it means on a hospital bill of Rs 8 lakh, Rs 5 lakh will be paid by you, and the rest Rs 3 lakh will be paid from Rs 10 lakh top-up plan. Typically, the sum insured on your base policy is the deductible on your top-up plan.
Note that every time a claim is made in a year, your minimum hospital bill has to be above the deductible for the top-up plan to trigger. Taking forward the above example, if you again fall sick in the same year, and your claim comes out to be Rs 3 lakh, you will have to pay it from your own pocket. The remaining Rs 7 lakh in your top-up plan will get triggered only when the hospital bill is above Rs 5 lakh. So, if the second claim in the year is of Rs 6 lakh, you would still pay Rs 5 lakh (deductible) by yourself and Rs 1 lakh will come from the remaining Rs 7 lakh top-up coverage.
Super top-up plan
The super top-up plans also have a deductible limit, typically same as the sum insured on your base health cover. However, you have to exhaust it only once in a year to trigger super top-up plan - not every time you get admitted to the hospital. For example, if you have a super top-up of Rs 10 lakh on your base policy of Rs 5 lakh, then if the first claim is of Rs 8 lakh, Rs 5 lakh will come from the base plan and the rest Rs 3 lakh from the super top-up. However, unlike the standard top-up plan which was of no use in the second claim of Rs 3 lakh in the above example, the super top-up plan will be applicable, and the entire Rs 3 lakh will be paid from the remaining Rs 7 lakh super top-up coverage. So, super top-up plans take care of multiple claims in a year after you have exhausted your base cover. (SEE TABLE)
"The higher the deductible, the lower will be the premiums on top-up and super top-up plans. Since you can claim more than once from super-top up plans, the premium on the same will be higher than that on top-up plans," says Rakesh Goyal, Director Probus Insurance, Insurtech Broking Company.
Who should buy top-up plans
Ideally, the sum insured on your health policy should depend on the average cost of hospitalisation in the city where you stay. However, if you already have a health plan with lower sum insured and upgrading it to the higher sum insured is not feasible, then additional cover with top-up plans will come handy, especially when you have a family floater policy covering multiple family members. People who only have a mediclaim from their employer must also buy top-up plans to boost their total health coverage.
"Medical inflation plays a vital role in health coverage. It moves faster than the regular inflation. So, you need to revise your basic sum insured as the years go by. My advice is to always go for adequate sum insured at the younger age and top it up as you grow older. Deliberating buying a health policy with lower sum insured along with a standard or super top-up will not be a good idea due to deductibles," says Jayesh Gadekar, Head, Health and Benefits, Global Insurance Brokers.
How to buy top-up plans
You can buy top-up plans either from the same insurer from whom you have bought the base policy or from a different insurer. However, it is advisable to have both the policies from the same insurer. "Having both the policies from the same insurer makes administrative process simpler because you may have to complete additional documentation if two insurers are involved. As per IRDA, all original medical documents must go to the insurance company. So, if documentation takes time, the insurer may ask you to pay the medical bills yourself and get reimbursement on the same. It will defeat the whole purpose of having a health policy," says Gadekar. Besides, before you buy a top-up plan, you must look into the exclusions and sub limits, if any. "Look at exclusions thoroughly rather than focussing on what is covered. If something is covered in the base policy but excluded in the top-up plan, then having a top-up plan will add no value," he adds.
Top-up plans are indeed a cost-effective way to enhance your overall medical coverage. But, having a health insurance policy with adequate sum insured should be your priority.
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