What role do these plans add to your existing base health insurance policy and is it even advisable to buy them?
What is a Top-Up Plan?
If you or someone close to you happens to be under any sort of medically challenging situation, a health insurance policy can swing its way in as a safety net. And in case you feel that your insurance policy is caught short of funds, a top-up health insurance plan may come in handy to cover you beyond that and act as a refill.
So, let’s assume you carry a healthcare policy with a small sum insured and you feel it isn’t enough, you can opt for a top-up option/plan while buying your policy. In comparison to upgrading your baseline policy, a top-up plan adds insurance coverage at a significantly reduced premium.
Pretty cool, right?
Let’s understand the grassroots underlier if you are considering catapulting your base policy. If your base coverage claim exceeds a certain threshold, this top-up plan will prove to be quite helpful (also known as a deductible). This implies that, right when the sum insured exceeds the deductible, would the top-up plan kick in.
You may ask what is a deductible? In a nutshell, a deductible is a specified amount covered either by you or the insurance company irrespective of whether a claim for hospitalization occurs during the policy period.
// Ms. Gill, for example, invests Rs. 3 lakhs in a medical insurance policy. However, she is concerned that the sum in her insurance will not be enough to cover her medical issues in the foreseeable future, and what if there are severe occurrences?
Rather than increasing the healthcare policy value and paying a higher insurance premium, her sister, Ms. Khurana, suggests that she should boost her medical policy amount by getting a top-up option of Rs. 7 lacs. If the hospitalization expense exceeds the deductible, the top-up health insurance plan will step in.
The issue now is: what is an appropriate deductible in health insurance policies? Her sister instructed her that the insured with top-up health insurance can select a preset deductible. As a result, she estimates a deductible of Rs. 3 lakhs.
Within a year, Ms. Gill has a cardiac procedure, resulting in a hospitalization expenditure of Rs. 5 lakhs. Because the hospitalization expense exceeds the deductible, the health insurance will pay Rs. 3 lakhs, whereas a top-up plan provider will provide the additional Rs. 2 lakhs. //
Here, if Ms. Gill would have chosen her deductible amount to be Rs. 5 lakhs, the top-up plan wouldn’t have engaged since the amount does NOT exceed the deductible.
What is a Super Top-Up Plan?
A super top-up plan has the advantage of covering claims for cumulative medical expenditures during a policy period. So, this plan comes into effect once you’ve spent more than the threshold/deductible. As opposed to a super top-up plan, a top-up plan only pays claims when a single medical bill amount exceeds the deductible.
To link it with the previous example
// Ms. Gill will now need to be hospitalized once more in 6 months, and the hospital cost is upped to Rs. 4 lakhs. A policyholder with a Super Top-Up health insurance coverage can claim numerous tabs in a year. The healthcare insurer will pay Rs. 3 lakhs of Ms. Gill’s invoice, while the super top-up health insurance provider will pay Rs. 1 lakh. As a result, Ms. Gill did not have to spend a penny out of her pocket. //
What do we think? – Ms. Gill has a basic health insurance policy for Rs. 3 lakhs and a top-up/super top-up plan worth INR 7 lakhs, both having Rs. 3 lakh deductible. In this situation, her top-up/super-top-up policy will only pony up if the amount totals more than Rs. 3 lakhs. No compensation will be granted within the top-up/super top-up plan if the expense is less than Rs. 3 lakhs, i.e., under the deductible/defined limit.
Pro Tip – If one day, just like Ms. Gill, you decide to go to an Insurance Company for a top-up/super top-up plan and the agent/desk personnel asks you for a defined limit, don’t be puzzled! Deductibles are often termed as defined limits and the terminology differs from one insurer to another.
We’d recommend that you get a super top-up health insurance policy if you are wary of the fact of foreseeing a couple of hospital visits in a year. In these events, the deductible is charged towards the entire medical expenditure spent in that year within the super top-up plan. You can also change the value of the deductible depending on your capacity to pay and your desirable outcomes from the plan.
Which one is better for you, Top-Up, or Super Top-Up?
Advisors typically recommend a Top-Up when they deduce that you don’t have any severe medical difficulties and are not anticipating having them soon. Likewise, if you’re at a greater likelihood of developing long-term conditions that will require repeated hospitalizations in the future, Super Top-Ups are recommended. Top-Ups are far less expensive than Super Top-Ups, therefore they’re considered as a method to spare some funds.
However, considering our lives, stress levels, and terrible food preferences, it’s extremely tough to predict what we need. Moreover, there’s always the possibility of being hospitalized because of a mishap. Today, you don’t always get yourself insured for the known anomalies, but the situations you have unheard of.
Even if the deductible is reached, a Super Top-Up will cover you and your family regardless of whether you have one or numerous hospitalizations.
To summarize, you can use Top-Ups and Super Top-Ups to boost your coverage without needing to put more money into the base health insurance. These additional plans begin paying as soon as the base policy is used up or you have paid the initial deductible amount – and can give a substantial amount of coverage at a reasonable price.
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