Understanding the Role of Top-Up Plans in Reducing Medical Expenses

Where even a minor surgery or hospitalisation nowadays can set you back by a couple of lakhs within days, a health insurance policy needs to be more than just exigencies. Even when you feel you have invested enough in health plans, escalating medical costs and multiple health hazards can make your investment seem inadequate.

Yes, you do have options like upgrading the existing plans or investing further in a new policy. However, both are quite expensive and may be cumbersome with age. Top-up plans have become cost-effective solutions in such situations as they allow an increase in the sum assured at an affordable premium amount.
How Do Top-up Plans Work?
Unlike a normal health insurance plan, top-up plans include deductibles or threshold limits. Top-up plans come into play when your hospital bills exceed the medical insurance claim cleared by your insurance provider. An additional claim can then be filed based on the top-up policy amount for the same hospital bills for the treatment delivered. Hence, a top-up amount covers medical costs beyond the basic specified limit. It can be defined as a backup plan which comes into play once you have exhausted your sum insured limit.
The major difference between a top-up plan and a normal health insurance plan is the deductible or threshold limit, which needs to be opted for during the purchase. Only if your threshold limit (the base policy limit) is exhausted can you use your top-up amount.
For example, if you have a top-up plan of 10 lakhs sum assured and you have chosen a deductible or threshold limit of 3 lakhs, the policy will only cover charges beyond 3 lakhs. If you have a claim of 7 lakhs, the provider will fulfil your claim till 4 lakhs (7-3 lakhs). Whereas in a regular premium plan, the entire amount of 7 lakhs will be paid, but the premium will be much higher. For multiple hospitalisation cases in a year, you can also go for super top-up plans.
Selecting An Ideal Deductible:
This is introduced by insurance providers in top-up plans to ensure the claim raised is genuine and not unnecessary. It acts as a deterrent to raise small, petty claims just because of the coverage available. Your premium amount may be quite low, but the amount deductible will be much higher, and you may also lose out on a no-claim bonus. It pushes you to raise only in case of a dire emergency and not during exigencies which are manageable.
A deductible can be compulsory or voluntary. As the name suggests, formar is strictly governed by the insurance provider. A voluntary deductible is the amount that you can opt for out-of-pocket payment in case of a medical claim. It is especially helpful if you are keen to go for a low-premium health policy. A cumulative deductible applies to a family floater plan where it is imposed on all members covered under the plan.
Significant factors that influence deductible amounts should also be considered while deciding on the trade-off between deductibles and premium amounts :
- The amounts available to choose from vary widely depending upon the plan types and the insurance provider across the market.
- Age is also a primary factor ,as deductibles tend to increase with age. Senior citizen policies have mandatory deductibles due to higher possibilities of illness and pre-existing medical conditions.
- Higher coverage levels are often followed by higher deductible amounts.
- Sometimes, insurance providers may offer deductibles depending on whether the facilities are availed at a network hospital or out of it.
- Deductibles may also vary as per geographical location as treatment costs vary in rural, urban and semi-urban cities.
- The structure of policy can also impact the deductible amount as some policies may have different deductibles for different services like prescriptions, ambulances or mental health services.
Cost Vs Benefits Trade-offs
This may sound simple, but it will baffle you once you are in the process of deciding between various top-up plans available. You may want to go for a lower premium, but the coverage might not be sufficient, especially if you have a family floater plan. Similarly, if you think you want the insurance provider to cover the majority of the medical expenses but are willing to bear the premium cost, you may prefer lower deductibles. But how do you balance?
A higher deductible top-up plan typically comes with low premium options, which undoubtedly look quite lucrative. But you may choose this option under circumstances when you are healthy and young and do not preempt frequent hospital visits. If you have some emergency funds stacked to take care of emergencies, you may also like to go for higher deductibles. Moreover, if your monthly income can only support regular low premium payments, it is a better option than not having coverage at all.
Low-deductible top-up plans should be your choice if you are a family man with children and senior parents and need frequent hospital visits. If you or your family member has any chronic illness or history of any lifestyle disease, you may also anticipate higher medical costs in future and ideally go for lower deductibles with a higher premium. However, you need to ensure steady financial income to avoid payment failures and policy lapses.

Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
Over to You
Care Health Supreme and HDFC ERGO Optima Restore are among the best health insurance policies in India today. It is a matter of your priority, coverage depth over cost effectiveness. Here’s a quick recap for you to make an informed decision.
Both offer coverage of up to ₹1 crore; Optima Restore starts at ₹3L, Care Supreme at ₹7L. Supreme offers unlimited recharge; Optima Restore offers 100% once a year, after a claim is made. Care includes OPD + unlimited e-consults; Optima lacks OPD, allows one consultation/year. Care gives a 30% discount + 500% bonus; Optima offers 8% discount + 50% bonus. Care Supreme is costlier but has more features. Optima suits budget buyers; Care fits those needing wider, long-term coverage.
Whichever health insurance plan you choose, ensure to read the policy wordings and seek advice from an expert before you make the purchase. The best health insurance is the one that covers you the way you want to be covered.
Speak to an Advisor Both offer coverage of up to ₹1 crore; Optima Restore starts at ₹3L, Care Supreme at ₹7L. Supreme offers unlimited recharge; Optima Restore offers 100% once a year, after a claim is made. Care includes OPD + unlimited e-consults; Optima lacks OPD, allows one consultation/year. Care gives a 30% discount + 500% bonus; Optima offers 8% discount + 50% bonus. Care Supreme is costlier but has more features. Optima suits budget buyers; Care fits those needing wider, long-term coverage.
Whichever health insurance plan you choose, ensure to read the policy wordings and seek advice from an expert before you make the purchase. The best health insurance is the one that covers you the way you want to be covered.

Other Health Insurance Products
Latest Post

Let’s be honest – life insurance planning isn’t exactly someone’s weekend hobby. It is the financial equivalent of flossing: we understand its importance, but we tend to put it off. But somewhere between balancing work and life, you might realise you need to have a solid plan in place – just in case.

If you think of life insurance, chances are you are picturing something people buy in their 30s or 40s. But what if you are 65 or older and just getting started? The good news is that you are never too late. Whether you are thinking of easing the financial burden on your family, covering final expenses, or simply leaving behind a legacy, there are life insurance options tailored just for you.
This article will be a guide to life insurance for senior citizens above 65 years, explaining why it is important, the type of insurance options, and how to get the right policy for you.

Health insurance plans are purchased with the hope of medical protection in times of need. However, sometimes it ends up being a source of surprise and disappointment. This mostly happens when people rush to buy health insurance plans, often overlooking essential aspects. Ignoring waiting period clauses, misunderstanding exclusions, and being unaware of sub-limits can lead to unwanted problems in the future.

If you are looking at investment policies offering INR 1 Crore in 5 years, we talk about some excellent plans in this post to help you choose the best one and reach your goal. However, it is important not to get swayed. Doing proper research and taking advice from financial or insurance advisors is important. Learn about such investment plan in this post.
The last few years have made it very clear that having health insurance is essential for everyone. Whether you are a young professional or a senior citizen, are single or have a family to support, health insurance cannot be ignored. Keeping this in mind, health insurance companies offer comprehensive plans that suit people with varied insurance needs.