Should you top up your health insurance?

Medical costs are skyrocketing by the day. To combat these costs, most individuals opt for either a personal insurance policy, or a group insurance policy that is provided by their organizations. However, the average corporate or individual insurance cover falls in the range of 1 lakh -3 lakh. With the complexity of diseases and the cost of treatment (a cardiac treatment could cost you close to Rs. 5 lakh) towards the same increasing with every passing day, it is best to take a ‘top up plan’ or a ‘super top up plan.’

What is a top up cover?

A top up cover means the additional cost on top of the insurance threshold limit will be covered by the plan. For example, if you have a health insurance for a sum insured of Rs. 2 lakh, and the cost of hospitalization is Rs. 4 lakh, you will have to dish out an additional Rs. 2 lakh towards your medical expenditure. However, if you have a top up cover plan, the initial Rs. 2 lakh can be claimed from the basic health insurance plan and the balance of Rs. 2 lakh can be borne by the top up plan.

In the top up cover plan, for every single instance, the threshold limit will be considered. For example, if your basic coverage is Rs.2 lakh, your top up coverage is Rs.5 lakh, and your hospitalization charges amount to Rs. 3 lakh. In this scenario, you can claim Rs. 2 lakh from your basic plan and Rs. 1 lakh from your top up plan. If you get hospitalized again during the term of your insurance policy and your medical expenditure costs you Rs. 1 lakh, then neither of the policy will reimburse you for this amount. The simple reason is that the first policy was claimed fully and the second policy threshold limit is applicable for every single instance.

There are very few health insurance companies that offer the top up cover plan. These plans are available for individuals, families (as a floater plan), and for corporate organizations too. The cost of these plans is much cheaper than regular plans and hence, it is a dire need in today’s time of high medical costs.

What is super top up cover plan?

It works just like a top up cover plan. However, while top up cover plans work on the threshold limit policy that is applicable on every single instance of hospitalization, a super top up plan works as an aggregator. For example, if you are hospitalized during the year, the plan will work in favour of the basic cover and an additional claim can be made through the super top up plan. For example, if your basic coverage is Rs. 2 lakh, your super top up coverage is Rs. 5 lakh, and your first time hospitalization cost is Rs. 3 lakh, then you can claim Rs. 2 lakh from the basic plan and Rs. 1 lakh from the top up plan. If you are hospitalized in the second instance and the claimable amount is Rs. 3 lakh, then the same can be claimed from the super top up plan.

Who should consider the top up plan?

Top up plans are available to the extent of Rs. 5 lakh and would be suitable for individuals having coverage between Rs. 1-5 lakh. The deductible premium should also be between Rs. 1-5 lakh. The premium for a top up plan is cheaper as compared to a super top up plan as its features are lesser.

Super top up plans are available to the extent of Rs. 10 lakh and would be suitable for individuals who would like to have a higher sum assured. Though the premium for this plan is a little higher as compared to top up plans, its benefits are many.

If you are married and have kids, then the importance of a top up / super top up plan cannot be ignored. It is also suitable for individuals who have a group medical insurance that is offered by their company, especially when the coverage is between Rs. 1-3 lakh.

Features of the top up and super top up plan

1. Cost effective: The cost of a regular health insurance plan is costly. However, top up plans are very cost effective. For example, a family floater plan for four members with a deductible of Rs. 3 lakh and a sum insured of Rs. 10 lakh on the super top up plan works out to be Rs. 9,112. On the other hand, the cost of the basic plan works out to be Rs.10,291. This means that you save three times the cost by opting for a super top up plan.
2. Tax benefit: The premium payment towards this plan can be saved under Section 80(D) of the Income Tax Act.
   3. No Basic Plan: The top up and super top up plan can be taken even without a basic plan, if the threshold limit can be borne by the individual.
3. Group Plan: If you have a group health insurance by the company, the same can be utilized as a basic plan and you can buy a top up / super top up plan in addition to the basic group plan.
4. Buy from any company: The top up and super top up plans can be bought from any company. For example, if you have a basic plan with a company, it is not compulsory to buy the top up plan from the same company. It can be bought through any other company too.
5. Conversion: If you have a health coverage from your organization, you can take up a super top up plan and at the age of 55, this plan can be converted to a regular plan. This is a special feature introduced recently by a private health insurance company, and soon, other companies may follow suit too.

Thus, we conclude that top up plans / super top up plans bring a lot of benefits to you and hence, your increasing medical costs can be covered by taking these plans. This would be even more suitable for individuals having a group cover from their organization.