The average ticket size of health insurance in the age of rising health care inflation is anywhere between Rs. 3 to 4 lakhs. While it may sound like a hefty figure, it may not be enough to cover hospitalisation costs for serious conditions. There is a high risk of overshooting the limit of your health insurance policy.
You may have a corporate health insurance plan. But in a medical emergency, it may be adequate to beat inflation. Your individual health policy too may also offer limited protection and higher coverage translates into big premiums.
When it comes to your medical needs, it is vital that you review them periodically. In case you gauge there is a significant shortfall, it is best to bridge the gap with a top-up or supplementary plan.
What Is A Top-Up Plan and How Does It Work?
Your present health insurance may not have adequate coverage to meet high bills for hospitalisation. Your options are to either purchase another policy or raise the sum assured on your current plan.
A top-up plan is more like an extension of your comprehensive health insurance policy. It helps increase the total cover value and expand the sum assured.
Plus, it only comes into play in the event of a single claim going over your assigned threshold. There is a deductible component of the plan. This implies that the insurance company will only settle claims for the part that has crossed the threshold limit.
At the point of purchasing top-up plans, you need to think of the following:
Not having a Mediclaim policy in times where medical emergencies can come knocking any time is a risky move. The top-up plan can offset these costs significantly.
How Many Types of Top-up Plans Are There?
There are two types of top-up plans available.
Regular Top-up Plan: The deductible limit in the case of a regular top-up policy is calculated on individual hospitalisation. If the medical expenses go over your threshold, the remaining amount will be borne by the insurance company.
In case if you do not have a basic health insurance plan already, the regular top-up, you will be responsible to pay the initial expenses, not going over the deductible of the top-up plan.
Super Top-up Plan: Like regular top-up plans, super top-up policies work in a similar manner. They provide coverage over and above the threshold limit of your basic health insurance. The deductible of such plans comes with pre-defined figure up to which your super top-up plan will not be able to offer any coverage. Until you reach this defined threshold, all expenses have to borne by your current comprehensive health insurance or as direct out of pocket expenses.
The difference between the two is primarily on the number of claims you can raise. While the regular top-up plan gives you provision for one, the super top-up policy allows multiple claims considering cumulative hospitalisation expenses in a policy year.
What Are The Benefits Of Buying A Top-up Plan?
There are several benefits associated with buying a top-up plan. While the primary reasons that make this back-up absolutely an essential investment are to minimise out of pocket expenses, there are other advantages like getting treated at your preferred medical establishment, etc.
Let’s deep dive into the ‘why’s’ a little more.
Offers Coverage Over and Above Your Basic Plan: In the event of you exhausting your coverage limit on your base plan, the top-up policy provides additional financial back-up. This means that your insurance company will bear any add-on expenditures which technically relieves you of any financial worries.
High Cover at Affordable Premiums: With top-up plans, you can get higher medical coverage. That said, the premiums come at affordable rates. What this essentially implies that you get dual benefits of a greater sum insured at lower costs and makes sense as an investment if you are at an advanced age in your life.
Mitigates Increasing Inflation in Medical Expenses: With the healthcare sector at the cusp of a paradigm shift is increasingly facing medical inflation every day. By purchasing a top-up plan, you can combat this inflation to a large extent as it offers additional coverage for hospitalisation. By passing on the risk to your insurance provider, you can again minimise on any additional financial burdens.
Coverage Against Pre-existing Conditions: Base health plans do not generally cover pre-existing conditions. Comprehensive health insurance does. Having a top-up plan adds another layer of protection. It comes in handy when you have a family history of illnesses already.
Income Tax Benefits: Under Section 80D of the Income Tax Act, you can claim tax exemptions just like you do for your general health insurance plans. That said, Rs. 25,000 still remains applicable as the cap. This comes into play even if the plan includes self, spouse, children and parents. The limit increases if you have a separate medical policy for senior citizen parents to Rs. 55,000 and Rs. 60,000 respectively.
What Should You Be Aware of When Investing In A Top-up Plan?
Before investing in a top-up plan, here’s what you should be cognizant of:
The Final Verdict
Rising medical costs are a cause of concern. Be it medications, diagnostic tests and hospitalisation, expenses are skyrocketing with every passing year. Given these uncertain conditions, it is absolutely essential to invest in a top-up plan that helps to relieve the financial burden of escalating medical expenses, either partially or fully.
Other than this, if you have back-ups like comprehensive health insurance and a corporate health plan, getting a top-up just closes the gap by offering 360 degree protection.