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How Top-Up Health Insurance Helps You Beat Rising Medical Costs

Adhil Shetty

A top-up plan works with your existing policy, supporting your regular health insurance plan. Think of it as a benched player who comes into the spotlight when your health insurance policy can’t provide the cover you need. Here’s what you need to know about a top-up policy.

What Is A Top-Up Health Insurance

A top-up policy provides the insured benefits of a health cover on exhausting the agreed deductible/threshold hospitalization cost. With healthcare costs getting increasingly expensive each year, a nominal health cover may not suffice for all your medical expenses. As a solution, you may be looking at increasing your health insurance cover’s limit. However, even though increasing your Rs.5 lakh cover to a Rs.10 lakh cover may seem like an obvious choice, it comes at a hefty premium. Instead, a top-up health insurance plan can meet your requirements. You can choose a top-up according to the gap that you see your regular policy is unable to fulfil.

Here’s how it works. Say your regular plan comes with a sum insured of Rs.5 lakh and you have also opted a top-up health policy of Rs. 10 lakh above a threshold of Rs. 5 lakh. Your hospitalisation expenses come to Rs.7 lakh. If you have a top-up of Rs.10 lakh, Rs.5 lakh will be covered by your existing health insurance and Rs.2 lakh will be covered by your top-up.

However, if you made another claim of Rs. 4 lakh in the same year, then, the top-up policy won’t cover it because it falls below the threshold of Rs. 5 lakh. So the top-up policy doesn’t consider the aggregate hospitalisation bill during a year.

Stay Insured At An Affordable Premium
Going by the above instance, when you try to amend your regular policy coverage limit from Rs.5 lakh to Rs.10 lakh, you will face a premium hike. In most cases you will have to shell out a substantial premium to get the benefits of a high-coverage health insurance policy. On the other hand, as top-up health plans kick in only once your existing policy’s cover is exhausted. So, insurers offering a top-up treat your original health insurance plan as the base plan. This reduces their risk and thus you can enjoy lower premiums on these plans.

Although health insurance premiums depend on a variety of factors such as your age, existing illness, family medical history, pan-India or local coverage, etc., see this example to better understand the monetary benefit that a top-up can give you. For instance, if your premium for 1 year for a sum insured of Rs.5 lakh is Rs.7,640, when you increase the sum insured to Rs.10 lakh, your premium will increase to Rs.10,414. In contrast, a 1-year top up with a Rs.5 lakh deductible and cover of Rs.10 lakh will cost you Rs.1,100.

Get An Optimal Coverage By Selecting The Right Plan
Even though a top-up health plan is a supplementary plan, it works as a primary support each time your normal health plan’s limit is exhausted. However, remember that most top-ups come into play only to bridge the gap during a single illness or relapse of an illness. So, read the terms carefully before you sign up.

Additionally, don’t confuse a top-up with an add-on or rider, which provides cover for say maternity or cancer. However, you can choose a top-up that addresses pre- and post-hospitalisation expenses, which may not be covered by your regular health plan to suit your needs better.

To enjoy the benefits of a top-up plan, you must first understand the purpose for which you are buying it. Keep in mind your and your family’s health needs and then decide by how much your normal health insurance is falling short. Then choose top-up health plans that offer maximum coverage, have an easy claim procedure, and have a low premium. Do not neglect a top-up health insurance plan; rather pay attention to selecting the best on offer so that when you need healthcare, you won’t dip into your savings.

The writer is CEO,