Is it a Right Choice to Buy Top-up Health Plan with Group Insurance?

The rising cost of healthcare necessitates that one has a decent coverage amount in order to pay the huge hospital bills, but the affordability factor is also an issue to be considered. That is why, insurers have launched the Top-up and Super Top-up plans that help in supplementing the coverage level with a very little premium outgo. So, if you have an existing policy, a top-up plan would make sense if you are looking for a coverage enhancement.

Let us explain this with an example. Let's assume, Mr. Sharma, who has a group health insurance plan by virtue of his employment, decided to avail a choice top-up plan for supplementing his cover. Was his decision correct? Is it is a wise move to buy a top-up plan with a group health policy?

Read More-: Why go for a Top-up Health Plan

The answer is a resounding ‘NO! A combination of a group health plan and a top-up plan is not a wise choice and there are substantial reasons to justify the answer.

First let us study the limitations of a Group Insurance Plan:

Limited Scope of Coverage

The whole point of having a health plan is to provide financial assistance in almost all type of medical contingencies. The underwriting principles of a group plan are lenient and so the company grants a limited coverage. This coverage is not sufficient to provide exhaustive coverage.

Rigidity

The coverage under a group plan is usually rigid in nature and cannot be customized as per the policyholder's requirement. This lack of customization poses a serious problem.

Instability

A group plan would continue as long as you are employed with your employer who is sponsoring the plan or associated with the group that provides its members group coverage. As soon you leave the job or exit from the group, the coverage stops. Though IRDA (Insurance Regulatory and Development Authority India) provides portability of a group plan to an individual plan, the process is ambiguous and might not yield the desired results. Buying a new individual plan after being removed from the group plan might result in higher premiums and limited coverage (due to age and medical history) and also the renewal of the waiting period.

Scanty Coverage Amount

The coverage in a group insurance plan is limited and not sufficient. At today's rate of inflation, a group health plan, therefore, does not provide the desired coverage level and is not enough.

Now that we have dissected the limitations of a group insurance plan, it is time to factor in the top-up or super top-up plan and where it comes into the equation. A choice top-up health plan is a means to supplement your health insurance coverage at minimal costs. Because of the nature of the plan, many of us think of adding a top-up plan with an existing group plan, which often proves to be a costly mistake.

A top-up plan has a deductible limit and claims beyond the deductible limit are honored under the plan. Ideally, an existing base plan's Sum Assured should coincide with the deductible limit kept under the top-up plan. Your group plan's coverage level might not be sufficient to meet the deductible limit and would therefore fall short making the combination useless.

1. Your top-up plan might not be able to fulfil the coverage level limitation which your group health plan has. A normal health insurance would only be able to that.
2. Your group health plan has continuity issues and your top-up plan is usually renewable for lifetime. If you exit from the scope of a group plan, your continuing top-up plan would be useless in meeting the entire claim amount. If you face hospitalization, the amount of the deductible limit would have to be borne by you.

Though the combination of a group health plan and a top-up plan proves very cheap for your pockets, but it has several limitations. If saving some thousand bucks today would result in spending lakhs a few years later, where is the wisdom in that. Invest in a good health insurance plan, even if you have a group health plan, to get a customized cover suitable to your requirement and then add a top-up plan to supplement your coverage.