If I Buy top-up Health Insurance, What Should be my Policy Cover?

Why do you carry a Stepney or a spare tire in your car? So that you can use this spare tire as a stand-by in case one of the tires gets punctured. Similarly, a top-up health insurance plan acts as a Stepney to your medical insurance policy upon exhaustion of the sum insured limit.

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    A standard mediclaim policy compensates hospital bills only up to the sum insured amount whereas, a top-up plan offers coverage when your current policy reaches a certain threshold.

    Simply put, when you are hospitalized, the insurance company will pay up to the sum insured limit. Whereas, a top-up plan will kick in only after your sum assured limit is crossed. For instance, Rs. 3 lakh was your limit, and then the top-up plan will pay the amount over and above it.

    What Does a Top-Up Plan Offer?

    Sometimes top-up health plans are confused with rider benefits such as hospital cash, personal accident cover and critical illness cover. Top-up plans do cover almost all the hospitalization expenses and riders cover only a few major illnesses. A rider plan can only be purchased with a base plan; however, you can buy a top-up plan regardless of the base plan. 

    In actuality, top-up health insurance is an indemnity plan that offers the same benefits as a standard reimbursement medical plan. 

    The sole difference is the cost of deductibles, which makes these plans affordable. To some extent, the underwriting may differ as the base mediclaim policy reduces the risk for the insurance company. 

    Plus, in a top-up plan, most of the insurers do not require medical screening up to the age of 55 years. And, in standard policies, it is required after 45 years. 

    If the current plan reached the threshold, the claim for both individual plan and a top-up plan can be filed together. And both can be purchased from different insurance companies, who will be liable to pay off the part of their claims. 

    Suppose, you have a mediclaim plan from one insurer, then you can buy a top-up plan from the same insurer or any other company.  

    Here is an illustration to Help you Understand Better

    Reema is 30 and her husband is 32. Recently they became parents to a girl. Currently they are covered under a family floater health plan with coverage amount of Rs 10 lakh. If they buy a super top-up plan with sum insured of Rs 15 lakh with a deductible of Rs 10 lakh, will they get a cover of Rs 15 lakh or Rs 25 lakh?

    In health insurance deductibles are the percentage of amount that needs to be borne by the policyholder at the time of claim settlement. In top-up plans deductibles are the threshold beyond which the super top-up/top-up plan is initiated.

    A top-up plan generally covers single hospitalization claim.  When the hospital bill exceeds the deductible limit during the hospitalization, then your top-up plan comes in to play. 

    If a top-up plan has a deductible of Rs 10 lakh, the policy coverage will come into effect after the hospital bill exceeds Rs 10 lakh. In the given scenario, if you buy Rs 15 lakh super-top up policy with deductible of Rs 10 lakh, your policy will be activated once the deductible limit exceeds Rs 10 lakh.

    So, if you file two health claims in a year of Rs 5 lakh and 5 lakh, and your top-up plan has a threshold limit of Rs 10 lakh, then it will not be triggered. It will only come into picture when the limit exceeds Rs 10 Lakh.

    How to Pick a Top-Up Policy?

    If you want to buy a cheaper plan, then go for higher deductibles. The idea is to buy extra cover without duplicating the actual benefits at a reasonable cost. 

    And, exclusions like the dental cover and daily cash allowance shall not make a huge difference as they will be covered by your base policy.

    Nonetheless, remember to check the waiting period clause for pre-existing illnesses, deductible criteria pertaining to single illness, maternity cover, coverage for pre- and post-hospitalization expenses, etc.

    Also, check if the plan offers coverage to your spouse, children or parents or not. Sometimes, it can be disappointing to know at a later stage, at the time of actual need.

    Last Words

    Undeniably, top-up health insurance plans will help you bridge the gap between actual medical expense and your existing policies.  And a top-up health plan is also a workable option for people having an existing individual policy or medical coverage from the employer as well.

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