Your money: Know how a top-up health insurance plan works

Top-up health insurance plans cover hospitalisation costs outside the specified limit.

One of the best ways to be financially equipped against uncertain health risks is by buying health insurance which provides people with financial support in times of medical emergencies. However, when it comes to buying a health insurance cover, tax rebates take precedence over adequate cover. People usually dismiss the significance of an adequate health cover with rather frail arguments that they are healthy enough or the present cover is sufficiently high.

Let us take the case of Sanjay Verma. He had a taken a health cover of Rs 5 lakh sum insured as he believed that this would be sufficient for any medical exigency. He and his family were quite assured even when he was hospitalised last April, as they believed that all the expenses would get covered. But, it came as a shock to them when the medical bills rose up to Rs 8 lakh and the family had to utilise the money that was set aside for their children’s higher education.

It is also a fact that a larger health cover, no matter how essential, may not fit into everybody’s budget. This doesn’t mean that there is no solution for it. This is where top-up plans come in.

What is a top-up plan?
Top-up plans are basically add-on plans which can be purchased in addition to one’s regular health insurance policy. Top-up health insurance plans cover hospitalisation costs outside the specified limit.

While regular health insurance policies compensate hospital bills equal to the sum insured, top-up plans cover costs after a certain threshold is attained. They not only cost less but offer high coverage too.

One of the best features of a top-up plan is that it is available with most health insurance companies and one can buy them either from the existing insurer or a different company.

How does it work?
Top-up plans function on a cost-allocation basis where medical expenses up to the threshold limit have to be borne by the policyholder either from his own sources or any base insurance plan.

Sum insured
Top-up plans can offer a sum insured ranging between Rs 50,000 and Rs 15 lakh, with the deductible falling between Rs 30,000 and Rs 5 lakh, respectively. This sum insured of the top-up plan will offer protection over and above the deductible amount which is being borne by another policy or any other source.

One of the biggest advantages of the top-up plan is that it helps in saving money as the premiums of a top-up are much lower than buying an additional insurance cover to make up for the deductible.

A top-up plan with Rs 10 lakh cover and Rs 5 lakh as deductible limit can be bought at an annual premium of as low as Rs 3,000. On the other hand, a regular health insurance cover for the same amount is likely to cost more than Rs 7,500. Top-up plans, thus, help the insured save more than 50% on premium.

No medical screening: Insurance companies offer top-up plans without requiring any medical screening. This is irrespective of the fact whether the top-up is from the same insurer or from a different one.

Recharge: Nowadays, there are top-up plans that come with recharge benefits too. If the sum insured under the policy is exhausted during the policy period, additional indemnity up to the limits can be availed. Top –up plans do not just cover hospitalisation charges but cover peripheral expenses as well.