Top-up your Health Insurance Plan.

Having a mediclaim is now a second nature to most of us. In the times of soaring medical cost, facing a hospitalisation without a health insurance is unthinkable. But how do you know whether the sum insured you have or the sum insured that is being offered by your employer is sufficient or not.  One individual’s sum insured amount might not be sufficient for another.

In most cases we start with a small sum insured and increase it as and when our age advances or as our family grows.  The disadvantage of this action is that as you increase your sum insured, the premium payable also increases, very often not proportionately. Higher medical covers are required in exceptional cases like a critical illness or a major accident. Most regular medi-claims offered by public sector insurers would have a maximum sum insured limit like Rs. 10lakhs if it is individual plan or Rs. 5lakhs if it is a floater plan. So what do you do when you want a health plan with higher sum insured?

Top Up plans allow you to increase your health insurance plan’s limit without burning a hole in your pocket. A top up cover actually kicks in after your “threshold limit” is exhausted or used. To illustrate, imagine you have a top up health cover of Rs 10lakhs sum assured with the threshold limit of Rs 5lakhs, in which case the policy will cover your expenses beyond Rs 5lakhs only. If your claim amount is Rs 7lakhs, then it will only pay you Rs 2lakhs (7 – 5), and not Rs. 7lakhs total. The biggest advantage of this top up plans is that the premium is comparatively very less because the policy will activate only after the threshold amount of the first policy is over. The chance of this happening is relatively rare. Since the chances of crossing the threshold limit is limited, the insurance company offering the top up plan can safely charge lower premiums.

Another variant of this is the Super Top up plans which takes into account the total of all the bills in a year and not just the single instance. So in case two bills of Rs 4lakhs each occurs in a year, the total bill amount is Rs 8lakhs and the assumed threshold limit of Rs 5lakhs, then Super Top up cover will pay you, where as Top up cover will not pay as it takes into account the individual hospitalisation bill amount only.

Top up plans can be taken for individual mediclaims as well as family floater mediclaims also. Likewise, it is not necessary that both the primary health policy and top up policy needs to be with the same company.  Just like any other mediclaim, tax benefits are available for Top up plans too.

The next time you plan to increase your sum insured, compare the rates of additional premium applicable for the primary policy and the top up premium payable.  Make a smart decision.