Top up plan: Enhance your medical cover at low-cost premium


The health insurance top up plan ensures that you get an improved policy at an affordable premium

Most people on an average buy health insurance cover between Rs. 1 lakh and Rs. 3 lakh. This amount may be sufficient for minor surgery. However with rising healthcare expenses, the above sum insured may not be sufficient.

Many people are also concerned about the limited amount of sum insured—which their health insurance plans offer—since medical expenses have increased tremendously. At the same time, these expenses can neither be delayed and unavoidable.

Hence, a common man may find himself in a “Catch 22” situation, where he wants to buy a sufficient amount of health insurance but also fears about the high premium amount which he has to pay.

It is here that one can consider the option of buying a top up plan. The plan is normally beneficial for those who already have a basic health plan and want to enhance their sum insured at an affordable premium amount.

You also have an option to buy a new health insurance policy or upgrade your current health insurance. However, both these options are expensive compared to a top up plan. Top up plans have “deductible” hence they are cheap. These plans also have threshold limit sometimes as high as the sum insured itself. 

What is deductible?

Deductible means a cost-sharing requirement under a health insurance policy. A deductible does not reduce the sum insured. 

Deductible is the amount over which the customer agrees to claim for each hospitalisation. The deductible amount will be deducted from the allowable claim for each and every mediclaim policy.

For example: Mr X has a basic health insurance Rs. 3 lakh and a top-up policy of Rs. 5 lakh with deductible of Rs. 3 lakh. In the event of a serious hospitalisation with a claim of Rs. 8 lakh; Rs. 3 lakh will be paid by his primary insurance and Rs. 5 lakh will be paid by his top up plan.

For instance, if a person has a top-up cover with a threshold of Rs. 3 lakh and gets hospitalised twice in a year with bills of Rs. 2.5 lakh and Rs. 2 lakh, respectively, the top-up plan will not be triggered. The top-up will kick in only after a certain amount, say, Rs. 3 lakh has been crossed. It'll pay for the claim amount over and above it.

Therefore, if you already have a health plan of Rs. 3 lakh, then you can opt for a top up policy of Rs. 5 lakh with Rs. 3 lakh deductible. It means that the initial Rs. 3 lakh would have been paid by your existing mediclaim and the remaining Rs. 2 lakh would have been borne by this top up plan.  

What is a top up policy?

As mentioned earlier, a top up plan is for those who already have an existing individual or group health insurance from their employers and want to enhance their medical coverage. The health insurance top up plan ensures that you get an improved policy at an affordable premium. Opting for a medical insurance top up can give you a wider coverage at a much lesser costs.

Top-up policies cover all treatment costs due to hospitalisation. These plans can be bought from same insurer or from different insurers. Pankaaj Maalde, head-financial planning, Apnapaisa.com, says, “It is advisable to buy top-up plan from the same insurer from which you have your individual or group health insurance. This saves time and documentation work and cost at the time of claim. Normally it is better to coordinate with one insurer for reimbursement of claim, than to coordinate with two different insurers.” 

How top up policy work

A regular policy reimburses hospital bills up to the sum insured, while a top-up plan covers costs after a certain threshold is reached. In other words, a top up plan provides for reimbursement of expenditure which arises out of single illness beyond the limit of the existing cover.

Please note, top up policy provides reimbursement of medical expenditure which arises out of a single hospitalisation beyond the threshold level i.e the existing mediclaim coverage.

For instance: An individual has a basic medical insurance of Rs. 3 lakh and he buys a top up plan of Rs. 5 lakh. His total sum insured would be Rs. 8 lakh. Unfortunately, the insured meets with an accident and is hospitalised. His claims amount is Rs. 3 lakh which will be paid from his basic policy.

Suppose, the insured person meets with an another accident during the same year and now his hospitalisation expense is Rs. 4 lakh. However, the insurer will not pay him Rs. 4 lakh but he can claim up to Rs. 2 lakh. (Top up policy less Base policy = Coverage amount; Rs. 5 lakh - Rs. 3 lakh = Rs. 2 lakh).  The insured person can claim up to Rs. 2 lakh as he has already used his base policy in the first accident during the year.

Thus, a top-up plan generally covers only single incidence hospitalisation. That is, if your hospital bill exceeds the deductible during single hospitalisation, only then can the top-up plan be used. The insurer will not be liable for any payment unless the medical expenses exceed the deductible. 

Affordable premium

A top up policy is very beneficial for policyholders since it is 20%-30% cheaper than a fresh mediclaim policy. It is advisable to buy a top-up plan only when you want to increase your coverage from your existing mediclaim coverage such that you can avail benefits from both plans.

This plan is crafted to provide additional coverage in the event of prolonged illness or a major accident. The family includes self, spouse, dependent children and dependent parents. You can buy one year or two years policy option for individual & family floater. Top up plans also provide you tax benefit under Section 80D of the Income-tax Act, 1961.


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