Everyone understands the importance of having health insurance and how it helps when a health emergency strikes. However, in the face of the current global health crisis, general health insurance plans are proving to be inadequate due to the significant rise in the cost of hospitalisation and medical care.
To counter the situation, many have upgraded their plans and have even taken additional coverage for critical illnesses. This may sound like a good option, but you should remember, it comes at a cost and the minimum waiting period applies to upgrades and additional coverage.
In such a scenario, you can go for top-up health plans, which offers you many health insurance benefits and protects you from additional expenses incurred during a hospital stay and is also a cost-effective option.
Therefore, let’s understand the top-up health insurance plan and when you should have it.
Top-up Health Insurance Plans
The role of top-up health plans is the same that of the spare tyre of your car. They provide additional coverage to your primary health insurance cover over and above the existing base cover. Compared to family floater plans or buying additional health coverage, top-up health plans are cheap and offer many benefits.
Let’s understand how it works.
Top-up health plans become active only when the policy coverage amount of primary health insurance is exhausted. Meaning, if the claim amount is higher than the policy coverage amount of primary health insurance, a top-up health plan will come to the rescue.
Before buying it, you should understand the deductibles, which is an important factor and also determines the premium amount of top-up health plans. So, what are deductibles?
In insurance parlance, the deductible is the amount paid out of your own pocket by the policyholder. But, with top-up health plans, it is a little different.
Suppose, your primary health insurance policy provides coverage of Rs 4 lakh and you want to increase it to Rs 10 lakh. Then, you need to buy a top-up health plan of Rs 10 lakh with Rs 4 lakh as deductible. In this case, you don’t need to pay anything from your own pocket, if the claim amount crosses the Rs 4 lakh threshold. But, if you keep the deductible more than Rs 4 lakh, say Rs 5 lakh, then any expenses over Rs Rs 4 lakh to Rs 5 lakh will have to be paid from your own pocket.
The deductibles should be fixed in such a manner that, once the coverage limit of your primary health insurance policy gets exhausted, the top-up health plan automatically kicks in.
Types of Top-up Health Plans
There are two types of top-up health plans:
Basic/Regular Top-up Health Insurance Plan
In this plan type, the deductible is applied only in the case of single hospitalisation or per claim in a year. Meaning, if the claim amount exceeds the deductible amount in event of single hospitalisation, then only a top-up health plan will provide coverage for the amount above the deductible. No claims will be entertained for subsequent hospitalisation in the same policy year.
Super Top-up Health Insurance Plan
In this plan type, the deductible is applied to the total claim made in a year and subsequently, the claim amount is settled. Here, you have the benefit of making claims for multiple hospitalisations, even if you have crossed the deductibles. However, such plans have a higher premium amount compared to regular top-up plans.
Points to Note While Buying a Top-up Health Plan
Before buying a top-up health plan, you need to check the following points with the insurer:
- Policy coverage of pre-existing diseases
- Diseases excluded from the plan
- Sub-limits like room rent, surgeries, medications and treatments
- Calculation and deductible limit in event of multiple-hospitalisation in a policy year
Always try to buy a top-up health plan from the same insurer, from where you have purchased the primary health insurance plan. It reduces the complexities and augments well with the existing plan. Also, you are entitled to multiple benefits like no waiting period, no change in sub-limits and similar terms and conditions.
How Much Approx You will Save with Top-up Health Insurance Plan?
There is a huge cost benefit in top-up health plans compared to normal health insurance plans. For example, for a 30-year-old healthy male, the annual premium cost for a Rs 1 crore regular health insurance policy will be around Rs 25,000. Whereas, with 5 lakh regular health insurance policy plus Rs 95 lakh top-up plan, the premium will be around Rs 10,000.
Other benefits like no medical checkups are required up to the age of 55 before taking a top-up plan.
With every passing day, quality healthcare and medicare is getting expensive and out of reach of the common man. And, following the Covid-19 pandemic outbreak, the situation has worsened. If you are feeling, your existing health insurance coverage is insufficient to meet the requirements, then you can go for a top-up health plan instead of increasing the coverage amount.