What are top-up insurance plans and how do they benefit you

With growing prevalence of diseases and the corresponding growth in the costs of treatment of these diseases, it is important to see if your health insurance policy provides adequate cover in these times of inflation. In case you think that your health insurance policy is not enough to cover the medical costs when the need arises, you need to invest in a top-up cover. It acts like an additional support on the exhaustion of the limit of your health insurance policy. These top-up plans provide additional cover without major expenses. A lot of insurance companies like star health insurance, Bajaj Allianz, HDFC Ergo, and Apollo etc. have introduced top-up insurance covers.

What is a top-up insurance plan?

A top-up insurance plan is an additional security in times of medical crisis. It is an added cover for individuals with an existing health insurance plan or a mediclaim plan from their employer. Top-up plans are for the reimbursement of medical costs because of single illness which is over and above the amount covered by the existing policy. The regular health insurance policy would cover the expenses up to the sum insured and a top-up cover would cover the expenses after the crossing of a certain threshold. The expenses over this threshold would be covered by the top-up plan.

What is a deductible?

The threshold limit associated with a top up plan is known as the deductible. This is the amount of the claim which is not paid by the insurer and has to be taken care of by the insured himself/herself. In case a top-up cover plan of Rs.4 Lakh has a deductible limit of Rs.1 Lakh, it implies that the first 1 lakh will have to be paid by the insured and the rest of the claim will be settled by the insurer. In this case, the individual can use the existing cover to pay for the 1 lakh incurred and then use the top-up for the rest of the claim.

What are the types of top-up plans?

Basic Top-up plan: These plans cover only a single incidence of hospitalisation. These act more as a high deductible plan and do not offer the full benefit of a top-up plan. Even if the total expenses incurred during multiple incidences of hospitalisation exceed the deductible limit, the top-up does not get activated as only single hospitalisation is taken into consideration. This is also the case with floater plans with individual bills for two different people which fall within the deductible limit. Plans offered by Star Health Insurance, Bajaj Allianz and Apollo Munich fall in this category.

Aggregate Claim Top-up plan: In these plans, all the hospitalisation cases are taken into consideration to arrive at the deductible limit. In case of a floater plan, the deductible amount is calculated by considering all claims made by the individuals covered by the policy. Insurance companies like HDFC Ergo, Max Bupa Health Insurance, United India Insurance and L&T General Insurance offer this type of top-up plan.

Most of the insurance companies in the market offer a basic top-up plan. But, plans that take into consideration the aggregate of the claims are a better option as they provide an additional cover at lower costs.

What are the benefits of a top-up cover?

A top-up cover is usually cheaper than a full cover of the same sum. This is due to the deductible section of the cover. Insurance companies are able to provide these plans at a lower cost because the deductible sections provides protection from the frequent minor hospitalisation expenses claims.

The individual should check health insurance policies offered by various companies and compare the advantages offered if opted for a top-up plan. Max Bupa Health Insurance offers the Heartbeat plan with the option of choosing a deductible. In case the individual opts for a deductible of Rs.1 Lakh, a 25% discount is given on the premium and for a deductible of Rs.3 Lakh, a discount of 45% is given. Similarly, for the Health Suraksha Plan offered by HDFC Ergo, for a cover of Rs.5 Lakh, the regular policy premium amounts to Rs.7250 whereas with a deductible amount of Rs.2 Lakh, the premium amounts to Rs.3000.

How to make use of a top-up plan sensibly?

The individual should choose the deductible amount sensibly. The deductible amount should at least be equal to the sum assured of the primary health insurance plan. Check health insurance policy and then choose the deductible amount wisely. By doing this, the amount of expenses up to the deductible would be settled by the primary health insurance company.

What are some other criteria and clauses of Top-up insurance plans?

Top-up plans usually cover just single incidence expenses of hospitalisation. In case the insured has to get hospitalised twice, the top-up plan will not cover the expenses both times. Some plans might also have single illness clause and conditions as to what is to be considered as a single illness. It is advised to check health insurance policies for all these details.

When to purchase a top-up Plan?

Top-up plans help an individual in increasing the amount of health cover. However, if the health cover from the existing health insurance policy is negligible, then the individual should opt for a regular health insurance plan. It is important to check the health insurance policies. Top-up plans are also not necessarily cashless as these work on a reimbursement basis. This means that these plans don’t always solve the problem of paying off medical expenses. Thus, it is important to have a decent amount of health cover and top-ups should be taken to provide additional security against rising costs and inflation.

A top-up plan is a good feature to in case additional financial security is needed over and above that provided by the existing healthcare plan. Given the increasing medical costs, a basic health insurance policy is not enough to provide protection for oneself and for the family. An adequate healthcare cover has to be ensured. A top-up insurance plan is an effective method to ensure this.