Average people take their health cover range between Rs1-3 lakh. But, with rising frequency of medical costs faster than inflation, this basic cover may not be sufficient, if something gets some serious illness, even a massive heart attack could eat your wealth range between Rs5-7 lakh and a serious accident can burn a huge hole in your pocket. Therefore, to address such issues seamlessly during the hour of need and in a stress-free manner, the requirement for health cover with higher sum insured is becoming inevitable.

top up

Let’s see how the top up plans can help to provide extended health cover to cope up any insufficient existing health coverage.

What is a Top-up Health Insurance Plan?

A top-up health insurance plan is generally taken as additional cover to add to your existing cover in a very economical way which covers hospitalization costs but only after a threshold limit. In insurance world, this limit is called deductible. A deductible is that portion of the claim amount has to be borne by the insurer. This deductible amount starts with a basic amount of Rs 1 lakh and it can go up to Rs 5 lakh depending upon the companies.  Put simply, it will pay for expenses incurred above that limit and work as cost-sharing basis. Owing to the deductible, these plans are cheaper than full-fledged covers and come in handy should the policyholder exhaust the existing/group policy’s sum insured.

How it works?

Let us understand with hypothetical example that suppose you have basic health cover for only Rs 3 lakh and you take a top-up cover for Rs 8 lakh. Now, all top-ups are taken with a ‘threshold’ level or ‘deductible’, only after crossing which the policy claim actually gets triggered. In the above example, the threshold level is Rs 3 lakh. The top-up cover would come into force after the Rs 3 lakh in the threshold level is exhausted. If you have a claim of Rs 5 lakh, the base policy would pay you up to Rs 3 lakh and the top-up policy would pay Rs 2 lakh.

On the flip side, if you have a claim of say Rs 10 lakh, your base policy will cover you for Rs 3 lakh, the top-up will provide you with Rs 5 lakh only as the total sum insured is only Rs8 lakh. So you will end up paying Rs 2 lakh from your pocket. In this regard, a ‘super top-up’ policy, may work where, threshold limit applies to total expenses incurred during the policy period.

Cheaper Cover

Cost wise, a top-up insurance cover may work out a lot cheaper than a regular health policy. Suppose you have a cover of Rs 2 lakh. However, looking at the soaring healthcare costs, you know this won’t suffice in a big emergency and want to enhance it by Rs 5 lakh. You can buy a separate health policy (which will cost around Rs 6,000 a year) or request your insurer to upgrade the plan by Rs 5 lakh. Both are expensive options. A top-up plan for Rs 5 lakh, on the other hand, will cost just Rs 2,000 a year.  In fact, top covers are cost effective the most when the deductible is high. You can afford a higher deductible when your basic cover is decent.

Who should to buy?

A top-up plan makes sense when you want to increase the cover without paying too much. Its deductible should be less than or equal to the base policy sum insured or should cover the sum insured of the base policy. So as a part of your overall financial planning process, you must definitely consider taking a top-up cover for a sufficiently large sum. It is best to buy a top-up plan, if the insured’s primary health insurance plan or the base cover has a lower sum insured value. In case, your employer has already been providing any health cover then top-up plans can have taken as the cushion to enhance and additional health coverage. Even your employer does not provide any cover; the top-up cover will also work as a normal indemnity insurance plan or base policy.

Caveat Emptor

Remember always, top-up health plans are meant to bridge the gap between existing policies and actual costs. The idea is not to duplicate but buy extra cover at a reasonable cost. Do not forget to check the deductible criteria for single illness, waiting period for pre-existing diseases, and limits inclusive of donor expenses, pre- and post-hospitalization expenses and understand the criteria for single illness. The most caveat emptor is that people are unaware about the threshold or deductible limits and it gets trigger only when the cost of single hospitalization goes above the threshold.

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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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