Should you opt for top-up, super top-up plans?

Most of us, despite knowing health is wealth, failed to understand its true meaning. Any unfortunate incident may leave you physically, mentally, emotionally and financially injured. Therefore, health insurance remains one of the most important parts of your financial planning. It helps protect from any unforeseen event.

Nonetheless, a majority of individuals believe that mediclaim coverage provided by the employer is sufficient enough to cover any medical expenses. However, these may be insufficient many times to cover your entire medical bills. So, you can increase your coverage by increasing your premiums. But there is a catch. These extra premiums may cost you dearly. So there is a smart way of doing this known as top-up and super top-up plans.

Top-up health insurance plans offer you additional coverage, which is beyond the maximum limit of your existing health insurance policy. The average medical cover opted (personal health insurance) or provided by an employer (group mediclaim) is of Rs. 3 lakh and you have Rs. 10 lakh top-up cover. In case you have a health claim of Rs. 5 lakh, the first Rs. 3 lakh will be provided by your normal health cover and Rs. 2 lakh will be settled by a top-up cover. Top-ups help you when the threshold of the existing health cover is already used or exhausted and there are some medical costs left to deal with, which otherwise exert pressure on your savings.

Moreover, it’s not necessary for you to have a health insurance plan to add a top-up; you can self-fund the threshold by way of what is known as a mandatory deductible, with the top-up coming into effect once this is paid for. The only limitation with top-up is that it pays the sum only above the threshold and does not consider the overall claims in years, and treats each claim as a fresh threshold.

So in a year, if you incur two claims of Rs. 5 lakh each, which means a total claim of Rs. 10 lakh, the basic health insurance will pay for only Rs. 3 lakh. The top-up will pay Rs. 2 lakh in each of the cases. This means the second time you will have to cough up Rs. 3 lakh on your own.

Top-up insurance policy has its own limitation, which can be resolved by opting for a super top-up policy. Unlike a top-up plan which pays only if the threshold limit on a regular policy is exceeded on a single hospitalisation, a super top-up provides cover over the threshold limit in multiple cases. In simple terms, a super top-up health insurance policy has provisions for multiple claims, which are not offered by a regular top-up plan.

Therefore, whether you should go for such plans depend upon the sum assured of your existing health insurance and if it suffices for expenses due to illness or accidents. If it falls short you may definitely consider buying a top-up or super top-up health insurance plan.