All you need to know about top-up health insurance plans

All you need to know about top-up health insurance plans

The expense of medical treatment has been rapidly rising. Whether it’s a doctor’s visit for something as little as a cold or fever or hospitalization for serious illnesses like cancer, your medical expenses can be hefty, which is why you should invest in a good health insurance plan.

However, considering the unexpected and severe nature of most medical emergencies today, your health insurance coverage may be insufficient. This is where this supplemental health insurance comes in.

What are top-up health insurance plans?

In addition to your standard health insurance plan or a group mediclaim policy, a top-up health insurance plan offers you medical insurance. As a result, having such a plan increases your level of financial protection against various health-related issues.

A top-up health insurance plan functions very similarly to your standard health insurance plan, but with less expensive premiums, making it more cost-effective. A top-up health insurance plan must not be confused with a health insurance rider for a particular sickness, such as a critical illness rider or a personal accident rider.

A top-up health insurance policy can be purchased independently, as opposed to a health insurance rider, which can only be purchased as an additional cover with your standard health insurance plan. Consequently, a top-up plan may be utilized as a supplement to your primary health insurance plan as well as an individual Mediclaim health insurance plan.

Different types of top-up plans

In India, there are two different types of top-up health insurance policies: top-up plans and super top-up plans. Both types of health insurance policies and how they operate have been explained below.

Top-up health insurance plan

A top-up health insurance plan provides you with additional health insurance coverage based on the number of claims you make. The sum covered under such a plan is only available if the claim amount exceeds the sum insured under the base health insurance plan.

Let’s assume you have a basic health insurance plan with a 5 lakh amount insured and a top-up health insurance plan with a 7 lakh sum insured. If you have already filed a claim of, say, 5 lakhs on your base health insurance plan but need to submit another claim of 3 lakhs, you cannot register a claim under your top-up plan since the amount of the second claim is less than the base plan’s sum insured.

To make a claim under your top-up health insurance plan, the amount of the claim must be greater than the sum insured under the base plan, which in this case is 5 lakhs. It is vital to understand that a top-up plan only covers one claim that exceeds the limits of your basic health insurance plan.

Super top-up health insurance plan

A Super Top-up Health Insurance Plan operates on the aggregate claims principle and allows you to make several claims. In the previous example, if you have a super top-up health insurance plan of 7 lakhs in addition to a base plan of 5 lakhs and exhaust the sum insured under the latter in your first 5 lakhs claim, additional claims can be filed against the super top-up plan.

The first claim under your super top-up plan will be settled once your health insurance deductible has been deducted. If this claim is worth 5 lakhs, then after the deductible of 1 lakh is deducted, the claim will be settled for 4 lakhs. You can make additional claims against this super top-up plan, but the total of these claims cannot exceed 3 lakhs because that is the sum insured remaining after the initial claim of 4 lakhs on this plan.

Super Top Up Health Insurance Plan offers an option of aggregate deductibles. Hence, every health insurance claim doesn’t have to be higher than your deductible. Rather, the total value of all claims made in a policy year should exceed this deductible. This provides you with more flexibility to utilize the benefits of your super top-up health insurance plan.

Advantages of top-up health insurance plans

The following are some of the advantages of investing in a supplement health plan:

Preventing medical inflation

The cost of hospitalization and medication is constantly rising, and your basic insurance plan may be insufficient to cover the expenses for both yourself and your family. It is crucial to invest in a top-up plan in such a situation as it prevents you from spending your money even if your basic health insurance plan is exhausted. Therefore, a top-up plan can allow you to receive quality care without incurring additional expenses.

Potential of upgrading your sum insured

Investing in a top-up plan allows you to increase your insurance coverage while keeping your basic policy in place. Since top-ups are less expensive than basic plans, it is preferable to increase your sum insured by investing in top-ups rather than investing in higher sum assured basic health plans, which would cost more in terms of premiums paid.

Senior citizen protection

Top-up insurance policies provide more extensive and comprehensive coverage for senior citizens at significantly lower rates than a higher sum assured basic health policy. Furthermore, many top-up plans have no restrictions or sub-limits on hospital expenses, making them particularly advantageous to senior citizens who may require frequent treatments.

Family discounts and tax benefits

Some top-up plans include family discounts, such as insurance up to a specified limit for dependents such as parents, children, and spouse. Additionally, you can also be eligible for tax benefits on the premium paid under Income Tax Act Section 80/D.

Easy convertibility and lifetime renewal

Several top-up health care plans allow you to simply convert them to basic health care insurance. You also have the option of renewing it for a lifetime, making it a constant in your life.

Cumulative bonus

If you do not need the top-up insurance throughout the policy period, you can earn a cumulative bonus of up to a specified limit for every claim-free year.

Whether you’re a corporate employee with a company-provided insurance policy, a senior citizen or your basic healthcare plan has a low sum assured amount, you should invest in a top-up plan. Even if you do not fall into any of these categories, it is always better to be overcautious than underprepared in case of a medical emergency.

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