All You Need to Know About Top-Up Health Insurance Plans – Forbes Advisor INDIA

The ongoing Covid-19 pandemic and the health crisis it caused on a global scale, has made it extremely clear that individuals cannot be prepared for unprecedented medical emergencies. The only way to have a safety net and not spend all your hard-earned money on treatments, is to invest in a comprehensive health insurance cover which takes care of all the medical requirements of yourself and your family. 

While we previously depended on the health insurance cover provided by our employers, Covid-19 has made us realise the importance of investing in a separate plan which offers protection against a number of health scenarios not covered by the plan offered by companies. 

Health insurance has never been as important as it is today, especially considering the fact that entire families could contract communicable diseases like Covid-19 and require expensive treatment. In such situations, comprehensive health care insurance can ensure optimal care and medication for the entire family, without adding to the stress already being borne by the breadwinners. 

Additionally, with consistent rise in medical inflation, it has become crucial to have adequate health insurance. In fact, many people often choose health covers with the lowest premiums and fall prey to insurance which is insufficient in times of emergencies. Such fallacies then force people to dip into their savings when the insurance limit is exhausted, something you would not have to do if you invest in a comprehensive and adequate health cover in the first place. And, even if you have already purchased a policy but wish to increase its limit, you can always opt for a top-up health insurance plan.

What is a Top-up Health Insurance Plan?

A prudent addition to your existing health insurance policy, the top-up health insurance plan offers you medical coverage in addition to the policy you have already purchased or received from your company. It is an indemnity policy which enables you to cover medical expenses above and beyond the sum insured offered by your regular policy, safeguarding you from expensive medical emergencies. Top things you must know about top-up health insurance plans include: 

  • The top-up plan involves a mandatory deductible and you will receive coverage only after paying the deductible amount. For instance, suppose your company offers you a medical policy with a INR five lakh sum assured limit and you invest in a top-up worth another INR seven lakh rupees for additional protection. 
  • You can avail the top-up plan only after your initial sum assured is exhausted. And, in case you undergo treatment worth INR nine lakh, INR 5 lakh will be paid by the original policy and the remaining INR four lakh will be paid by the top-up.
  • If you are worried about the coverage offered by your regular policy, top ups are a wise and affordable decision as they are more economical when compared to basic health insurance. 
  • Top up plans usually offer cover against in-patient hospitalisation expenses, pre-hospitalization and post-hospitalization expenses up to 60 days and 90 days respectively, daycare procedures, some organ donor expenses, emergency ambulance charges, and domiciliary treatment expenses. 
  • Top up plans do not require pre-medical screening till you are above 55 years of age, so investing in plans at a younger age can keep you safe for longer, and at a lower premium. 
  • When choosing the best plan for your needs, look for plans with higher deductibles and also ascertain that there is no duplication in the benefits being offered by your basic plan and the top up you are considering. 
  • Most of the exemptions in top up plans would most likely be covered by your basic plan, so you need not be greatly concerned. However, do check the waiting period on the plan, when considering pre-existing health conditions and also look for plans with adequate coverage for pre and post hospitalization charges. You should also consider maternity cover and deductible criteria in relation to a single illness before choosing your top up. 
  • Also ensure that your top-up plan offers adequate protection to your family members, including your parents, children, and spouse.  

Different Types of Top-up Plans 

When considering top up health insurance plans, there are two types which you should consider. 

This plan offers you insurance coverage in addition to the sum insured by your basic policy, up to a certain limit. Your top up plan gets activated after your medical expenditure crosses the deductible limit on the plan.  

Offering more benefits and sum insured as compared to the top-up plans, the super top-ups offer additional insurance coverage even after your medical costs go higher than the threshold limit. The difference between the two plans is that the top-up plan considers the threshold limit/deductible while processing every individual claim while the super top-up assesses all the claims coming up within the policy duration.

Super top-up plans cover claims in line with the total medical charges incurred during the policy period, while a top-up plan only works on individual claims. Additionally, the top-up plan covers claims only when a single claim goes above the sum insured limit while the super top-up offers protection when the total claims during the policy period exceeds the threshold limit.

While both the plans have their advantages, it is up to you to decide which plan would be the best fit for you and your family. If you and your family members are relatively healthy and do not run the risk of developing a chronic disease, a top-up plan would be sufficient. However, if you have pre-existing health conditions, and believe yourself or your dependents at risk of chronic illnesses in the future, then super top-up plans will stand you in good stead. 

Benefits of Top-up Health Insurance Plans

Advantages to investing in a top-up health plan include: 

  • Curbing medical inflation 

The price of hospitalization and medication is rising consistently and your basic insurance plan may not be sufficient to cover the costs for both yourself and your family. In such a situation, it is prudent to invest in a top-up plan as it protects you from spending your savings even when your basic health insurance plan gets exhausted. Therefore, a top-up plan can enable you to access quality treatment without worrying about the additional expenditure.  

  • Possibility of raising your sum insured 

Investing in a top-up plan offers you the possibility of increasing your policy coverage while also maintaining your basic policy. As top-ups are more affordable compared to basic plans, it is better to raise your sum insured by investing in top-ups instead of investing in higher sum assured basic health plans as these would cost more in terms of premiums paid.

  • Senior citizen protection 

Top-up insurance plans offer greater and more comprehensive coverage for senior citizens, and they do this at highly affordable premiums, when compared to a higher sum assured basic health policy. Further, many top-up plans come with no restrictions and sub-limits on hospital expenses, making them extremely beneficial to senior citizens who may require frequent treatments.     

  • Family discounts and tax savings 

Some top-up plans offer you family discounts, including insurance up to a specified limit for dependents like parents, children and spouse. Further, you can also avail tax benefits on the premium paid, under Income Tax Act Section 80/D. 

  • Easy convertibility and lifelong renewal 

Many of the top-up health care plans allow you the possibility of converting them to basic health plans seamlessly. Further, you also receive the lifelong renewability option, making it a constant in your life.

If you end up not requiring the top-up insurance during the policy period, you can avail a cumulative bonus, up to a specified limit, for every claim-free year. 

Bottom Line

You should invest in a top-up plan if you are a corporate employee with a company-provided insurance policy, or a senior citizen, or your basic healthcare plan has a low sum assured amount. Even if you do not fall in any of these categories, it is always best to over prepare than be unprepared for the eventualities in case of a medical emergency. 

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