Top-Up Plan: Why it is a Wise Option to Upgrade Your Health Insurance Policy

Posted on: Feb 2, 2022 | | Written by:

Top-Up Plan: Why it is a Wise Option to Upgrade Your Health Insurance Policy

Published on February 8, 2022. EST READ TIME: 3 minutes

The ongoing COVID pandemic has taught us quite a few things about life. And one of them is the importance of having a health insurance policy. However, merely buying one is not enough. You must ensure that your health insurance coverage is adequate to provide you the necessary financial support during medical emergencies. Now, your policy might come with a great-looking sum insured. But it doesn’t mean that it can’t fall short of what you need. On such rainy days, a top-up plan can come to your aid. Let’s learn more about it.

What is a top-up plan?

To understand what a top-up plan is, you must first understand how it is different from a standard health plan. Well, as you know, health insurance provides you financial assistance when you incur medical expenses. It lets you easily afford quality healthcare facilities. Thanks to its cashless treatment features and the insurer’s big network of hospitals, you can not only find a good health centre in your vicinity, but also focus on quick recovery without worrying about the medical bills. Its coverage offers many more benefits. Now, as part of the coverage, you get a sum insured which is the amount up to which the insurer will cover your expenses. But what happens if the expenses go way beyond that limit?

Say hello to a cost-effective plan called a top-up. The way it works is like this - it covers the expenses but only after a limit, which is called the deductible. Deductible is that portion of the claim amount that needs to be paid by you, the policyholder. But once the threshold limit is crossed, the benefits of the top-up plan will get activated. This deductible portion makes the plan a pocket-friendly one as it reduces the liability of the insurer. A top-up increases your health insurance cover at a reasonable premium. However, the deductible should not be greater than the sum insured of the base policy.

Why is a top-up plan important?

A top-up plan has the same inclusions and exclusions as your standard plan. And when you compare its premium with the premiums of an additional health plan, you can save a lot by buying a top-up plan instead.

Let’s try and understand with an example.Let’s say you have a policy with a cover of INR 5 lakhs. But considering the rising healthcare costs, you realise that this sum assured may not be enough during a bigger emergency. So, you want to enhance it with another INR 5 lakhs. At this stage, if you decide to buy a separate health policy of INR 5 lakhs or increase the sum insured of the existing plan to INR 10 lakhs, then you will be choosing a more expensive option. However, a top-up plan of INR 5 lakhs (with the deductible amount being 5 lakhs) will cost you less than half the premium in comparison.

You can buy a top-up plan as an independent policy as well. But in absence of a base policy, you will need to pay the amount till the deductible threshold is crossed. In this example, that would mean paying INR 5 lakhs to the hospital from your own savings. It’s also important to discuss the terms and conditions with the insurer as a few top-up plans allow only a single claim settlement, while a few others provide the provision of multiple settlements till the upper limit of the sum insured is exhausted. The latter is called a super top-up plan. Unlike top-up plans, super top-up plans add the expenses from two or more hospitalisations to calculate the deductible.

The deductible needs to be agreed upon by the insured party,which is you, and the insurer, when taking the plan.Also, ensure that it suits your budget and needs based on your medical history. Do opt for the deductible carefully because if the deductible is higher, the premiums will be cheaper, but if the deductible is too high, the top-up plan will not even get activated in the first place.

Conclusion

All in all, atop-up plan works best when you want to increase the cover without paying a bigger premium. While a health plan can cover your hospitalisation expenses, having a top-up to deal with prolonged or costlier treatment is a good option. Remember to ask the insurer about discounts, renewability clauses, waiting period, eligibility, and exclusions before finalising the deal.

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

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