Planning for health insurance is often deemed as tricky. With the various features, it is a difficult decision to choose a favourable policy. Further, with the soaring prices of healthcare facilities, you can find yourself being underinsured even if you already have an insurance policy.
To avoid such situations, you can opt for an additional insurance cover. Yes, you read it right. You need not cancel your existing policy missing out on all the accrued policy benefits. One can simply make use of top-up health insurance.
So what is top-up health insurance?
A top-up cover is an add-on to your regular health insurance plan and kicks in when the coverage from your primary insurance plan is exhausted. It may also be opted foras astandardhealth insurance plan. However, unlike a standard health insurance in India, a top-up plan comes with a threshold known as a deductible.
A deductible is a threshold which the insured is required to reach before the top-up cover kicks in. So to sum it up, selecting a policy with a lower threshold is beneficial as these top-up mediclaim plans come into the picture only after you reach the threshold amount.
Thus, based on the coverage provided by your existing health insurance plan, you can select a top-up plan that, when combined with your regular policy, provides a more significant amount of sum insured.
How do top-up plans work?
Top-up plan, as opposed to other types of health insurance, work on a cost-sharing basis. The policy comes into force only when the threshold amount, as specified in the policy terms, is exhausted by the insured. To have a clear understanding, let us look at an example:
Mr Rahul has a standard health insurance policy with ₹15 lakhs cover. He opts for a top-up plan of ₹25 lakhs with a threshold limit of ₹15 lakhs. Now, if he incurs hospitalization expenses of ₹12 lakhs, it will be reimbursed by his base health insurance policy. Alternatively, if the hospitalization expense amounts to ₹18 lakhs, his base plan offers coverage till ₹15 lakhs, and above that, he is covered by the top-up plan.
Now that we know what top-up plans are and how they work, let us look at the benefits of using a top-up policy.
Protection over and above base policy:
One of the primary reasons why you must opt for a topup health insurance is the financial backing it provides when you exhaust your base plan. You can stay worry-free knowing if the medical expenses shoot up the standard coverage amount, your top-up plan has you covered.
Affordable premiums with high coverage:
Top-up policies are available at affordable premiums. You can simply choose the desired amount of coverage and pay an additional premium for it. It has dual benefits of higher coverage at an affordable price. The benefits of top-ups can come for cases where there are chances of frequent hospitalization.
Helps to combat medical inflation:
The ever increasing medical inflation is hard to gauge. For this reason, a policy opted today might seem insufficient a couple of years down the line. This difficulty of every increasing medical inflation can be overcome using a top-up policy. It can not only help you increase coverage subsequently, but also make up for any other deficiencies.
Like any other health insurance plan, premiums paid for a top-up cover are eligible for exemption under section 80D. Thus, apart from increasing medical coverage, it also contributed to lower your tax liability too.
Lastly, while you look for suitable top-up plans, make use of a health insurance premium calculator to get appropriate plans at competitive prices. It not only helps in the shortlisting process, but also to secure good deals at affordable prices.