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Things to Consider While Buying a Top-up Health Insurance Plan

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We buy health insurance policies because we don’t want to exhaust our savings or struggle to pay the hefty bills during medical emergencies. However, deciding the sum insured can be tricky because if it falls short of covering your expenses, your financial stability will be shaken. This is where a health insurance top-up plan can come to your rescue. It supplements your existing coverage at an affordable premium. Let’s learn more about the many benefits of a top-up plan and what you should consider before shopping for this policy.

What is top-up Health Insurance?

A top-up health insurance provides additional coverage to your existing group/individual health insurance plan. Simply put, it comes into play after the sum insured by your base health insurance plan is exhausted, thus enhancing financial protection. Top-up plans have a mandatory deductible or threshold limit and are activated only after you pay the deductible or the threshold limit is reached. You can pay the deductible amount from your pocket or health insurance plan.

Benefits of Top-up

Some benefits of buying a top-up plan are listed below.

• Cost-effective

Top-up plans generally cost you less when compared to buying a new plan with a higher sum insured or increasing the sum insured of your existing health plan. Suppose you have a health plan of Rs 3 lakh for which the premium is Rs 6000 per year. Now, you want to increase the coverage to Rs 5 lakh. If you increase the coverage of your existing healthcare policy from Rs 3 lakh to Rs 5 lakh, the premium will increase to Rs 10,000 per year. But, if you opt for a top-up plan, the premium will be less, say, around Rs 8,000 annually. The premium of top-up plans is usually Rs 1,000 per lakh cover.

• Increase in coverage amount

Most health insurance plans let you increase the sum insured of your existing policy only to a certain extent. The insurance provider decides how much a policyholder can enhance the coverage amount. But in the case of top-up plans, you have the liberty to decide the coverage amount.

• Beat medical inflation

When your regular health plan is not sufficient to meet the expenses related to healthcare because of medical inflation, a top-up plan will enable you to enhance the coverage at an affordable cost. You can continue accessing quality medical care without worrying about the costs after your base cover has been exhausted.

• Tax benefits

You are eligible for a tax deduction on premiums paid towards top-up health insurance plans.

When to get one

If you feel your existing individual health insurance or family floater policy doesn’t provide adequate protection to you and your family, and you have been spending from your pocket for the excess claim amount, a top-up plan is the best option. The top-up plan will increase the coverage at an affordable cost. It will save you from paying higher premiums if you upgrade your existing policy or buy another plan with a high sum insured. But remember, top-up plans come with a deductible amount. Once you pay the deductible amount from your base healthcare plan or your pocket, the top-up plan can be availed when your medical expenses exceed the sum insured.

Things to consider before getting a top-up plan

Before buying a health insurance top-up plan, here are some things you should consider —

• Waiting period

Like regular health insurance plans, most top-up plans also have a waiting period for pre-existing and specific illnesses during which you cannot raise any claims. So, check the waiting period before buying a top-up plan.

• Co-payment

Top-up plans also have a co-pay clause, which means you have to pay a certain portion of the claim amount while the insurance company will cover the rest. Consider the co-pay clause before enhancing your base healthcare policy with a top-up plan to avoid more out-of-pocket expenses.

• Deductible

Top-up plans have a high deductible or threshold limit. This means the plan will get activated only after the sum insured of your base health plan reaches the threshold limit. Make sure you can afford the deductible amount.

• Network hospitals

Before buying a top-up plan, make sure both your base healthcare policy and top-up plan have the same network hospitals so you can avail of cashless treatments.

• Policy renewal age

Some top-up plans may have a maximum renewal age, after which you cannot renew the policy. Also, the renewal age of top-up plans and base plans may differ.

• Policy exclusions

It’s important to check the list of treatments not covered in top-up plans. For example, dental treatments, self-inflicted injuries, and sexually transmitted diseases are generally excluded from coverage.

• Single hospitalisation

Top-up plans can be used only during a single hospitalisation. In other words, you can use the top-up plan to cover the excess amount only if the threshold limit is crossed in a single bill. For example, if the threshold of your top-up plan is Rs 3 lakh and you get hospitalised two times in a year with bills amounting to Rs 2 lakh and Rs 2.5 lakh, respectively, you cannot use the top-up plan. If there’s a relapse of the disease within 45 days of discharge, it is considered a single illness. If the relapse happens after 45 days of discharge, it will be considered a new ailment.

Picking up a plan

The premium will be low if you choose a high deductible for your top-up plan. So, before picking up a plan, make sure you thoroughly read the terms and conditions of the policy, such as coverage, benefits, waiting periods for pre-existing ailments, and specific diseases, and check the deductible amount of the plan. Check if the plan mandates per-claim deductible or overall deductible.

Conclusion

Want to add an additional layer of protection to your base health plan at a pocket-friendly cost? Well, a top-up plan is the answer. But before buying the plan, check the plan’s coverage and other factors mentioned above to make an informed decision.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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