The answer to the above question is— not everyone can afford to buy a high-end health cover. For such individuals, a health insurance top-up plan is an excellent way to increase the cover while keeping the cost in check.As far as health insurance needs are concerned, being covered under the corporate health policy or buying a mediclaim for a meager sum insured of say, Rs 2 or 3 lakhs, is not sufficient. In fact, this is one of the most common mistakes which most of the people make while buying health insurance. Either they rely completely on corporate health cover or settle with a little amount. Healthcare costs are rising at an unprecedented rate and not taking immediate steps to combat against them could prove disastrous in the long run.
While the corporate health cover may not be available once you leave the job or after retirement, a meager health insurance coverage may prove insufficient in dealing with skyrocketing medical costs.
Merely having a health insurance is not enough if it is not for a sufficient amount. The inadequate cover is like carrying a baby umbrella. You think that your umbrella will protect you from the rain, but in fact, you will get wet even after you are holding it above your head all the time. But not everyone can afford to buy health insurance cover for the required amount.
Also, a mediclaim policy with a restoration benefit is not going to help you. If you have a restoration benefit, the insurer will reinstate the entire sum insured immediately as soon as you exhaust the limit during the policy tenure. At first glance, this feature may look appealing to you, but there is a catch. The restored benefit can be used only for ailments other than diseases for which claims have already been settled. For instance, if your previous claim was for heart attack, you can’t make any claim related to this illness again.
Therefore, one should buy super top-up plans which give high coverage at affordable rates without any restriction on the usage.
What are super top-up plans and how do they work?
A super top-up plan offers additional coverage beyond the ‘threshold limit’. It helps you when you exhaust your existing health insurance coverage. In insurance parlance, the threshold limit is called deductible. A deductible is a portion of the claim amount which has to be paid by the policyholder before the insurer makes any payment. So, if you already have a health insurance policy or you are covered by your employer, then the deductible limit can be paid by your existing policies and anything above that limit can be compensatedby the super top-up plan.
Let’s understand with an example how super top-up plans work
Anil has a health insurance policy covering him, his wifeMeera and two kids, for an amount of Rs 5 lakhs. Considering the rising medical cost, he buys a super top-up plan for an amount of Rs 15 lakhs with thedeductible limit of Rs 5 lakhs. Now, his family has a total health insurance cover of Rs 20 lakhs.
Scenario 1: Meera is hospitalised and the total medical bill is Rs 4 lakhs. Anil can get the full claim amount from his traditional health insurance policy and there will be no claim payable from the super top-up policy, as the bill amount is less than the deductible amount.
Scenario 2: Anil is hospitalised and the total medical bill is Rs 4 lakhs. In the same year, Meera is also hospitalised and the bill amount is Rs 3 lakhs. In the case of Anil, the entire medical bill will be covered by a traditional health insurance policy. As Anil will consume a major part of the health insurance amount, Meera can only useRs 1 lakh from the traditional health insurance policy. But Anil had bought super top-up policy, which pays when the total claim amount exceeds the threshold limit, i.e., Rs 5 lakhs. In this case, the limit crosses the deductible amout(4+3), the remaining Rs 2 lakhs will be paid by the super top-up plan.
Why should you go with super top-up even if you have a top-up policy?
For many people, top-up and super top-up policies are same. But in reality, there is a major difference between these policies. In the case of top-up policies, every claim amount is considered individually, but in case of super top-up policies, all claims are aggregated. It means, the total of all medical claims amount is considered. For instance, you have super top-up and top-up policies of Rs 10 lakh each. Both the policies have a deductible of Rs 5 lakhs. As top-up plans work individually, if there are two individual claims of Rs 3 lakhs and Rs 4 lakhs, nothing will be covered as none of the claims has crossed the threshold limit of Rs 5 lakhs.
In this case, your super top-up policy will help you. As it considers the total of all the medical claims, your both claims of Rs 3 lakhs and Rs 4 lakhs will be covered. In this case, the total claim amount is Rs 7 lakhs (3+4), which is more than the threshold limit.
Benefits of super top-up plans
- As it covers the total claim amount, it fills an important gap left behind by top-up plans
- You can buy it even if you don’t have any health insurance policy
- You can buy it from any insurer as there is no compulsion that you get it from the same insurer from whom you have purchased your health insurance policy
- You can enjoy tax benefits under Section 80 D of the Income Tax Act
Super top-plans are fast gaining popularity in the insurance sector as there are many health insurance companies in India which are offering these policies. Some insurers also allow portability from a super top-up plan to a regular health insurance policy. For many people, buying a higher sum insured of, say, Rs 10 lakhs or Rs 20 lakhs is not sufficient. Therefore, it is better to opt for super top-up plans which invoke only when the base coverage is exhausted. Further, they are much cheaper than a regular mediclaim policy with the same sum insured. A super top-up policy gives you the flexibility to choose a higher insurance cover.
So, instead of buying a high-end health insurance cover, you can go for super top- up health insurance plan to expand the coverage while keeping costs in check.