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Top-Up Plan vs. Higher Sum Insured – What is the Best Choice for Your Family’s Health Insurance?

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When it comes to securing your family’s well-being, the right health insurance plan is essential. However, with the rising medical costs and inflation, the sum insured by your current healthcare plan may not be enough to cover expensive medical treatments. In this case, you can either opt for a top-up plan or increase the sum insured by your existing policy. However, both these options come with their own set of benefits and considerations. Therefore, it is important to study your family’s specific healthcare needs and choose a suitable option accordingly. Here, we will tell you how health insurance with a high sum insured differs from a top-up plan.

What is health insurance with a high sum insured?

A health insurance policy with a high sum insured is a plan that provides a larger coverage amount. Although the policy has the same inclusions and exclusions as a standard health plan, it is designed with a higher sum insured to cover more extensive medical treatments, hospital bills, and surgeries. This insurance product is ideal for individuals and families looking for comprehensive coverage for costly medical procedures.

Features and benefits of health insurance with a high sum insured

The features and benefits of health insurance with a high sum insured are —

1. Higher coverage: The policy has a high sum insured or a larger coverage amount, typically ranging from INR 10 lakhs to INR 1 crore or more. This can help you cover more expensive treatments and hospitalisations.

2. Comprehensive protection: These health plans offer coverage for a range of medical expenses, including hospital bills, pre- and post-hospitalisation expenses, home healthcare, daycare procedures, and organ donor expenses. You can also choose important add-ons, such as critical illness cover or maternity cover, as per your healthcare requirements.

3. Financial security and peace of mind: With increasing healthcare costs, having health insurance with a higher sum insured saves you and your loved ones from the burden of large medical bills. This reduces your out-of-pocket expenses and ensures peace of mind, allowing you to concentrate on your treatment and recovery rather than fretting about the bills.

4. Access to quality healthcare: A higher coverage allows policyholders to opt for reputed hospitals and healthcare providers for quality treatment without worrying about the costs.

What is top-up health insurance?

A top-up health insurance policy is an insurance cover that complements an existing healthcare plan. It provides coverage beyond a specific limit and eases your financial burden. If your medical expenses exceed the sum insured by your primary health plan, the top-up plan will cover the remaining bills. While a top-up health plan is like a regular one, it offers some advantages to policyholders, an important one being low premiums. The premiums of top-up health insurance policies are affordable when compared to a regular healthcare plan. Therefore, opting for this insurance product ensures adequate coverage without financial burden.

Features and benefits of top-up health insurance

The following are the features and benefits of a top-up health insurance plan —

1. Enhanced coverage: A top-up plan enhances the coverage of your existing health plan and eases financial worries during expensive medical procedures. If the sum insured by your base policy gets exhausted, the top-up plan will cover the remaining bills.

2. Policy inclusions: A top-up plan covers various medical expenses, including hospital bills, pre- and post-hospitalisation expenses, daycare procedures, home healthcare, organ donor expenses, and road ambulance bills.

3. Deductible: Top-up plans come with a deductible, so the insurer offers coverage only if your medical bills exceed the deductible amount.

4. Affordable premiums: Since the deductible in top-up plans lowers the liability of insurance providers, these policies are available at lower premiums. Therefore, choosing a top-up plan can ensure adequate coverage at affordable rates.

5. Flexible coverage: You can convert a top-up plan into a regular one at the time of policy renewal.

Health insurance with high sum insured vs. top-up plan

Which option is more affordable?

If we take affordability into account, a health insurance policy with a top-up appears to be a better option. You can get a top-up at low premiums when compared to a high sum insured plan.

For example, you buy a family health insurance policy covering 4 of your immediate family members, the oldest one being 45 years old. You take a regular family health plan of INR 20 lakhs with a top-up of INR 30 lakhs. In this case, the policy premium may be around INR 25,000 annually.

If you buy a regular health plan with a high sum insured of INR 50 lakhs, the premiums may be INR 35,000 to INR 40,000 or more. However, it is important to note that insurers offer health insurance with top-ups at low premiums because these plans are available with a deductible. If you raise a claim, the insurer is liable to pay only if your claim amount is higher than the deductible. Moreover, you must pay the deductible amount before filing a claim.

A top-up plan is a good option if you have a base/regular health plan, but the sum insured is not sufficient for huge medical expenses. Here’s an example:

Suppose you take a family health insurance policy of INR 20 lakhs and a top-up plan of INR 30 lakhs. The deductible for the top-up plan is INR 5 lakhs. Here’s how the reimbursement of claims will work in different scenarios:

• If you file a single claim of INR 15 lakhs during the policy term, the same will be covered by your base/regular health plan.

• If you file a single claim of INR 30 lakhs during the policy term, your base/regular health plan will pay INR 20 lakhs and the remaining amount of INR 10 lakhs will be paid through the top-up plan after you have paid the deductible.

• Suppose you make multiple claims of INR 5 lakhs, INR 15 lakhs, and INR 4 lakhs during the policy term. In this case, the first two claims will be paid through the base/regular health plan. Since the claim amount for the third one (INR 4 lakhs) is less than the deductible of your top-up, you will have to pay it from your pocket.

Which type of health plan should you choose?

The type of plan you must choose primarily depends on the age and health of the covered family members. If the covered members are healthy and below 45, the chances of high and multiple claims are low. In this case, you can choose a regular health plan with a top-up to keep premiums affordable.

If any covered member suffers from pre-existing conditions and requires regular healthcare, a health insurance plan with a high sum insured is a better option. Although policy premiums will be on the higher side, the claim settlement process is easier. Moreover, you won’t have to worry about paying the deductible from your pocket.

Conclusion

To sum up, when choosing a family health insurance policy, weigh the pros and cons of both options and make an informed purchase decision. Doing so will prevent financial setbacks during expensive medical treatments and ease your worries. It is also advisable to buy the base and the top-up plan from the same insurer for hassle-free settlement of claims.

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

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