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Health Top Up Plans

 

How important do you think an adequate sum insured is in a health insurance plan?

Well, if you consider the exorbitant medical expenses, you would say it is very important.

Let's discuss why - Newer technologies have revolutionized medical science, and you will have to bear the costs to get the best treatment for yourself or a loved one. A simple hospitalisation can cost tens of thousands and in case of a serious ailment or disease, the costs would be exponentially more. So, when you buy a health insurance plan you are not only protecting your finances but also ensuring the best treatment possible is available. But if the sum insured is not adequate, you will have to meet the expenses from your own pocket or forgo a vital treatment. On the other hand, the premium outgo on a higher sum insured may not sit-well within your budget. So, how do you solve the dilemma?

The answer is simple - health insurance top-up plans. These plans help in increasing your health insurance coverage while being easy on your pockets.

Do you know what these plans are and how they work? Let's find out:

Health top up plans are Health insurance plans designed to complement your health insurance coverage. Used as an add-on to an existing plan, they allow you to increase the coverage at affordable premiums to help meet medical expenses.

There is a deductible limit under top up plans. Only when the claim exceeds the deductible limit is the plan triggered and a claim paid. For instance, in a top-up plan of Rs.5 lakhs, there is a deductible of Rs.2 lakhs. The plan would pay the claim only if the claim is more than Rs.2 lakhs.

Health top-up plans come in two variants - top-up and super top-up plans. Let's understand each:

Basic Top-up health insurance plans

Top-up plans treat each instance of claim as an isolated incident. At every claim, the claim amount is tallied against the deductible limit. If the claim exceeds the deductible limit, the excess is paid.

Super top-up health insurance plans

Super top-up plans are similar to top-up plans but with one major difference. Under these plans, the aggregate claims made in one policy year are compared against the deductible limit. If the total claim exceeds the deductible limit at any time, the excess is paid.

Let's understand the different between basic top-up and super top-up health insurance plans with the help of an example:

Example: Mr. A faces three claims in a policy year. The claim values are Rs.1 lakh, Rs.1.25 lakhs and Rs.2.5 lakhs respectively. Suppose the deductible limit in both top-up and super top-up plan is Rs.1.5 lakhs, here is how the claim would be settled:

Claims Basic Top-up plan Super top-up plan
First claim Since the claim of Rs.1 lakh is below the deductible limit, no claim is paid Since the claim of Rs.1 lakh is below the deductible limit, no claim is paid
Second claim The claim amount of Rs.1.25 lakhs is below the deductible limit, no claim is paid The aggregate claim = Rs.1 lakh + Rs.1.25 lakhs = Rs.2.25 lakhs.
The aggregate claim of Rs.2.25 lakhs exceeds the deductible of Rs.1.50 lakhs.
A claim is paid for Rs.0.75 lakhs or Rs.75,000.
Third claim The claim amount of Rs.2.5 lakhs exceeds the deductible of Rs.1.5 lakhs. A claim of Rs.1 lakh is paid The aggregate claim = Rs.1 lakh + Rs.1.25 lakhs + Rs.2.5 lakhs = Rs.4.75 lakhs.
The aggregate claim of Rs.4.75 lakhs exceeds the deductible of Rs.1.50 lakhs.
A claim of Rs.3.25 lakhs is paid.

As you can see, a top-up plan does not pay any claim in the first and second instance, a super top-up plan does. This is the reason a super top-up plan is also called an aggregate top-up plan.

Health top-up plans, both basic top-up and super top-up, allow you to increase your coverage without a very high premium outgo. They have affordable premium rates and are a good addition to an existing health insurance plan. If you are covered under an employer-sponsored health plan or have an existing health plan with lower sum insured levels then buy health top-up plans to enhance the scope of coverage. Choose a top-up health insurance policy where the deductible is equal to the existing health insurance sum insured. In that case, claims up to the deductible limit would be met by your existing health plan while claims above the deductible limit would be taken care of by health top-up plans.

Given the rising medical expenses, health top-up plans make for a prudent choice and should not be missed.