It’s no brainer that medical costs are going through the roof and it’s necessary to get your health insured to save yourself from any financial blow. So how much have you covered yourself for-Rs 2 or 3 lakh? Is it sufficient enough? What if you suffer from an illness which costs you Rs 5 lakh? No doubt, you have to bear the burden of Rs 2 lakh from your own pocket. This will also derail your other financial goals. If you are worried about the large premium that you have to dole out for getting a bigger cover, you must check out top up health plans. These plans add to your existing cover at an affordable price. Actually, these plans help bridge gap between existing cover and actual costs.
The good news is that the entry age starts from as low as 3 months and goes as high as 70 years in these plans. Apart from public insurer like United India Insurance, many private insurers like Apollo Munich, ICICI Lombard, HDFC Ergo and Bajaj Allianz offer top-up policies. The sum assured ranges from Rs 2 lakh to Rs 15 lakh and the deductible is usually between Rs 1 and Rs 5 lakh respectively.
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What works best for the top up health plans is their cost-effectiveness. These plans are cheap. Take for instance you are 35 year old male, the premium for a basic health cover of Rs 2 lakh would cost you anywhere between Rs 2,700 and Rs 5,700. On the other hand, almost with the same premium you can get yourself covered 5 times the sum assured if you go for top up plans. A top-up policy with a sum assured of ?10 lakh would cost you between Rs 2,300-3,700, from insurers like Bajaj Allianz and Star Health. A top up policy of Apollo Munich with coverage of Rs 5 lakh and deductible amount being Rs 2 lakh would only cost you Rs 1179 annually for an individual between 18-34. On the other hand, under its easy health plan you can avail the same coverage for Rs 6137.
How does it work?
The top up plan start their work only after reaching the threshold level known as deductible. The later is the amount over which the claim for the hospitalization kicks in. This is unlike the medical policy where the cover starts from Rs 1. Let’s say you have basic health cover for Rs 3 lakh and you take a top-up cover for Rs10 lakh. In the above example, the threshold level of the basic policy is Rs3 lakh. The top-up cover would come into effect only after the Rs 3 lakh threshold level gets exhausted. Suppose you make a claim of Rs 5 lakh, the basic policy would pay you up to R3 lakh and the top-up policy would pay remaining Rs 2 lakh.
But in case the claim is Rs 12 lakh, your base policy will cover you for Rs 3 lakh after which your top-up policy will kick in. But it will provide you with the rest Rs 7 lakh, as the total sum insured is Rs10 lakh. For extra Rs 2 lakh, you have to dip into your pocket.
The disadvantage with top- up policies is that you can make a claim only once a year. These policies are also not cashless.
Super top up plans
Apart from top-up plans, there are super top up plans too. While a top-up health plan covers you for single hospitalization, a super top up plan can help you make claim for multiple hospitalization in a year. The insured has the flexibility of making the claim in one instance or through multiple instances during the year. As compared to a top up policy wherein a single claim alone needs to be above the deductible amount, in this case multiple claims during the policy period can be clubbed to cross the deductible amount and trigger the claim. At present, Insurers like L&T, Max Bupa and United India Insurance offer this type of insurance. Let’s see how this works out.
Assume you have a basic health insurance cover for Rs 3 lakh and take a super top-up for Rs12 lakh with Rs 3 lakh as deductible. If you have a claim for Rs 4 lakh, the super top up would fill up Rs 1 lakh above the threshold level of Rs 3 lakh. And again if you are hospitalized and make a claim of Rs 4 lakh, your super top up policy would cover you for the entire amount for the second time. So you don’t have to spend anything from your own.
A super top up policy is also cheaper like top up policy. Take for instance super top up policy from L&T insurance. For Rs 25 lakh policy (Rs 20 lakh cover with a 5 lakh deductible) the premium for a customer works out to be Rs. 2472 if he is under 35 yrs of age. It costs Rs. 2719 for an individual in the age band of 36-45 yrs and Rs 4079 for an individual in the age band of 45-60 yrs. But a Rs 10 lakh basic health cover from the same insurer alone would fetch you Rs 17243 if you an individual between 26-35 years of age. So one gets to save approximately Rs 15000 annually. This is a huge saving on the cost front and helps you realize your other financial goals in life.
Like a regular policy for top up plans, there is a minimum waiting period of 30 days, exclusion of treatment in case of some ailments and individual limits for specific diseases in the case of top-ups. However, you get coverage for pre and post hospitalization expenses in addition to day care and domiciliary treatment.
However, some insurers, such as Bajaj Allianz, waive off waiting period and allow immediate cover in case you already have another health policy where you have spent waiting period. Moreover, you don’t have to wait for a 4-year period for pre-existing diseases if you already have a policy running with them and the period has passed. On the other hand, Insurers like Apollo Munich offers a top-up that offer deductible free coverage between the age of 58-60.
While you can have basic health policy and top up plans from different insurers and still make a claim by informing both of them, it’s advisable to go with the same insurer in order to get faster documentation process.
The good news is that you can claim tax benefits under section 80 D of the income tax Act for top up and super top up plans like any basic medical policy.
The top up and super top up plans also help you avail the facility of 15-day free look period and return the policy if unsatisfied. In fact, some insurers offer guaranteed renewal and accept cashless request within a stipulated time frame. These plans are available in both individual as well as family floater options. Another good news is that you don’t need to go through medical test up to the age of 55. This is in case of cashless plan but in reimbursement plans, this age limit is lower.
So if you want to enhance your health insurance cover at an affordable premium, top up plans are the ways to go. It is the need of the hour.