Top-ups for Your Health-Insurance Plan
A hedge against chronic illnesses?
Here we revisit our earlier study on top-up health-insurance plans (published in January 2017 issue of Consumer Voice), focusing on aspects such as product update or improvement, if any, with reference to user feedback and claim settlements, as well as new players in the segment. The following report will add on to our information on what to expect from top-up health plans (including for senior citizens), what the benefits/riders are, what the inclusions and exclusions are, and which companies offer the best, good and fair policies. After all, it is hardly ever as simple as just topping it up. How is it different from a standard health-insurance plan? What are threshold limits and deductibles, and when is a top-up applicable?.
– Subas Tiwari & Gopal Ravi Kumar
When even a minor surgery and attendant hospitalization can set one back by a lakh or a couple of lakh rupees, a health-insurance policy needs to be more than equal to exigencies. What if there is a situation of multiple hospitalisations within the same year? One can barely afford to be complacent about such matters and if the existing health-insurance cover seems inadequate in the face of escalating costs, one will look to increase the coverage. What are the options here? Buy another health policy or upgrade the existing plan? However, both are relatively expensive options. Here, top-up plans make sense
because these will let one increase the sum assured at an affordable premium amount—at half the cost or even less compared to other options.
How Does a Top-up Work?
Unlike normal hospitalisation policies, top-up plans come with a deductible or threshold limit. You have to select the threshold limit at the time of purchasing the policy – this is the amount up to which you or your existing policy can pay the medical bills. As long as your present ailment is fully met by your existing policy and the hospital bills meet the policy claim amount (through either cashless or reimbursement method), there’s no worry. The topup plan does not come into the picture here.
Top-up plans work when your hospital bills show expenditure in excess of the medical-insurance claim estimates cleared (either by in-house arrangement or through a third-party administrator) by the insurance company. In such a case, you can very well file an additional claim on the top-up policy on the same hospital bills for treatment undergone.
A top-up health-insurance plan covers hospitalisation costs beyond this specified limit (called the base amount policy).
Thus, basically a top-up health policy is an additional coverage for people who have an existing individual plan or a mediclaim cover from the employer. Note that it is for reimbursement of expenditure that arises out of a single illness/hospitalisation beyond the limit of the existing cover, if any.
For all purposes, top-up health plans are a backup to your health-insurance policy after you exhaust the sum-insured limit. A regular policy reimburses hospital bills up to the sum insured, while a top-up plan covers costs beyond the specified limit. So, for a little extra premium, one may own a complete health-insurance plan.
The Deductible Makes It Different
Unlike normal hospitalisation policies, top-up plans come with a deductible or threshold limit. You have to select the threshold limit at the time of purchasing the policy, which is the amount up to which you or your existing policy can pay the medical bills. Only if your hospital bills cross the deductible limit can you use the top-up plan. Thus, the only difference between a normal health-insurance plan and a top-up plan is the deductible.
Top-up health-insurance plans come handy when the threshold of the existing health cover is already used or exhausted and there are some more medical costs left to deal with, which would otherwise exert pressure on your financial savings.
For example, let’s assume that you have a topup health cover of Rs 10 lakh sum assured, with the threshold limit of Rs 3 lakh, in which case the policy will only cover your expenses beyond Rs 3 lakh. If your claim amount is Rs 8 lakh, the insurance company will pay you Rs 5 lakh (8–3), and not Rs 8 lakh. In a regular health-insurance policy with sum insured of Rs 8 lakh, the entire amount of the claim – that is, Rs 8 lakh – will be paid. It is another matter that premium amount will be much more than that in a top-up policy.
You must of course check deductible criteria for pre-existing disease, single illness, and pre/posthospital is at ion. Also, the higher the deductible, the lesser will be the premium amount (due to less insurance risk for the insurer).
Reasons Why You May Want a Top-up
• You have not yet taken any health-insurance
policy. • You do have a basic/regular health-insurance policy with, say, X company but this company does not provide a top-up cover. • You have a health-insurance policy but the sum assured is not significant to cover huge hospitalisation costs. • You want to minimise the premium amount.
It is not compulsory to have a health-reimbursement policy to buy a top-up plan, but it is futile to take a top-up policy unless you have a reimbursement cover equal to at least the ‘threshold limit’ of the top-up plan. This way you will be able to take care of your bills even before the top-up plan starts working. A top-up plan can be taken even if you have a group heath cover from your employer.