What are top-up health insurance plans?

A top-up health insurance plan provides additional medical coverage expenses that are above a set deductible. A deductible is that portion of the claim that is not covered by the insurer and has to be paid by the policyholder before the benefits of the top-up policy kick in. You are free to choose a deductible of your choice while buying a top-up plan. It is just that, the top-up policy will not reimburse up to the set deductible. You may or may not necessarily have a basic insurance plan. You can use your basic policy to meet the deductible target or pay it from your pocket.

For example, if your current policy has a sum assured limit of Rs 5 lakh and you purchase a top-up plan of Rs 7 lakh, Rs 5 lakh is set as the deductible limit as that is to be paid by you. If you have a basic health insurance policy, then you can utilise that. Suppose you claim for Rs 10 lakh, your basic sum assured of Rs 5 lakh will be used and the remaining Rs 5 lakh from the top-up plan. If the claim is above Rs 12 lakh, then the remaining amount has to be borne by you.

Likewise, there are super top-up plans where the deductible is applied to medical expenses incurred during the policy period, unlike a top-up health plan where the deductible limit is calculated for each hospitalisation. Therefore, super top-up plans are more beneficial than the top-up plans as the deductible is applied collectively. For example, if you have a threshold limit of Rs 5 lakh and a top-up cover of Rs 7 lakh, and if you're hospitalised twice with bills amounting to Rs 4 lakh for the first time and Rs 5 lakh for the second, the super top-up policy will get triggered during the second hospitalisation as the total expenses of Rs 9 lakh crosses the threshold of Rs 5 lakh. This deductible amount can be paid from your current health plan and the remaining can be paid by the super top-up insurer.

The option for portability can be a query among policyholders. Well yes, you can port between policies that are of a similar nature and category. Suppose if you have a top-up plan from insurance company A, you can port to a top-up plan from insurance company B. However, you cannot port from basic health insurance to a top-up plan and vice versa.

A top-up plan is a cost-effective way to increase your health insurance coverage. If you feel that your existing medical policy may not suffice, you can go for a top-up plan. This way you can use your base health insurance policy to make a claim up to the deductible amount and use your top-up plan for any payments over that. It will offer an additional sum insured to help you cope with unforeseen medical emergencies.

Suggested read: Top-up health insurance for increased cover

This article was originally published on June 15, 2022.