Why you should opt for a super top-up health policy

During a medical emergency, additional sum insured (SI) or health cover always comes in handy. There are multiple ways in which an individual can enhance his/her health cover. One such is top-up plans.

There are two kinds of top-up plans — regular and super top-up. These are sold as separate policies by insurers such as ICICI Lombard, Bajaj Allianz and HDFC Ergo. As a policyholder you can buy this policy anytime over and above your existing health policy. Top-up plans are similar to a regular health cover where you get covered for hospitalisation and other medical expenses. They are different only in terms of coverage initiation. In other words, the policy will be applicable only if the expenses overshoot a certain limit known as deductible. Here is how they work.

How does it work

While both top-up and super top-up plans are usually considered over and above the existing health policy, super top-up plans are a better version. This is because super top-up plans come into effect as soon as the deductible limit is reached irrespective of the number of claims made in a year. Deductible is the limit beyond which the insurer will cover you. On the other hand, top-up plan covers kick in only when the deductible limit is reached for every claim individually. Let’s understand this with an example.

Joe has a health cover for ₹3 lakh. To enhance this, he takes a top-up plan for ₹7 lakh, with a deductible limit of ₹3 lakh. Now, during the policy year, Joe gets hospitalised for an illness and his medical bills come to₹1.5 lakh. Joe’s base policy will cover this and the top-up cover of ₹7 lakh remains intact. During the same year, he gets hospitalised again. This time, his bill comes to ₹2 lakh. His base policy takes care of his expenses up to ₹1.5 lakh (₹1.5 lakh has already been spent) and the balance of ₹50,000 must come from Joe’s pocket. The top-up plan will not come into effect as the deductible limit is ₹3 lakh.

In an alternative scenario, if Joe’s first hospital bill comes up to ₹4 lakh, then both his base policy and his top-up plan can cover his expenses. Upon his second hospitalisation, if the bill works out to ₹2 lakh, it has to be borne by Joe. The top-up plan cannot help him as the deductible limit of ₹3 lakh is not reached.

The super top-up plans also work in a similar fashion. The only difference lies in its applicability. So in Joe’s case, if he had opted for a super top-up plan of ₹7 lakh with the same deductible, then, upon his first medical bill of ₹4 lakh, his base and super top-up policy would have covered him. Now, on his second bill of ₹2 lakh, the super top-up plan will still cover him as the deductible limit on it had been reached upon the first claim itself.

Points to note

Most insurers offer super top-up plans given their advantages. But a few insurers still offer top-up plans as well. Further, it is the ‘deductible’ feature of top-up plans that makes them cheaper than regular health plans. Higher the deductible, lower would be your premium. Top-up plans are a cost-effective way of increasing your health expenses cover.

However, despite the attractiveness of these plans, there are a few points to keep in mind.

One, all the waiting periods — initial, pre-existing disease and disease-specific waiting period — will continue to apply on the top-up plans as well. Two, these plans can also come with conditions including co-pay and sub-limits. And lastly, top-up and super top-up plans are health policies, which means, they have to be renewed every year. In other words, be prepared to shell out premiums for both regular policies as well as your top-up policies.

You can also upgrade your existing health cover with higher SI at the time of renewal, if it works out cheaper than a top-up plan.

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