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Options to Increase Your Health Insurance Coverage in a Cost Effective Manner

By Vikas Chandra Das
21 July 2022, 11:46 AM
increase health insurance coverage

The importance of owning a health plan and its innumerable benefits has been much spoken about. It is no secret that healthcare costs are on the rise by the day. In such a scenario, just having medical plans is not enough; having health insurance plans with adequate coverage is the need of the hour. A plan with insufficient coverage will ultimately drain your savings on expensive medical treatments. Therefore, the health insurance coverage should be optimal only with complete coverage. 

While optimal health insurance coverage is necessary, one cannot ignore the associated premiums. A high sum insured requires you to pay a high premium which might prove to be unaffordable. You need coverage where the sum insured is optimal and the premiums are also affordable. Different Ways You can Opt for Optimal Coverage in a Health Insurance Plan.

1. Make lifestyle changes

Your lifestyle habits affect your health which, in turn, affects the premium of your health insurance plan. If you practice healthy living, exercise, eat a balanced meal, and quit smoking and drinking, you can improve your health. When you would be healthy your premium rates would be low, allowing you to opt for a high sum insured without burning your pockets.

2. Opt for deductibles of co-payment

Health insurance plans allow you to choose a deductible limit and if claims exceed the chosen deductible limit, the policy would pay the excess claims. If you choose deductibles, your premiums are reduced considerably. So, if you have an employer sponsored group health plan, opt for deductibles to lower the premium and afford a high coverage. Alternatively, you can opt for co-payment and pay a part of the claim yourself. This would also reduce your premium and allow you to afford a high sum insured.

3. Choose family floater plans

Rather than buying an individual health plan for your family members, you can cover them under a family floater policy. The premium would reduce considerably and you would be able to enjoy a high sum insured.

4. Cover dependent parents separately

When buying family floater plans for your family, it is better to exclude dependent parents from the coverage since the premiums would be driven up unnecessarily. Moreover, their frequent claim experience would deny you the benefit of no claim bonus. So, buy a separate health plan for your senior citizen parents so that they can be adequately covered and your family floater’s premium is not unnecessarily pushed up.

5. Buy top-up or super top-up plans

This option is, by far, the best way to opt for a high coverage at lower premiums. Let’s understand how and why in detail -  

Introduction to Top-up Health Insurance Plan

Top-up plans are regular medical insurance plans that cover healthcare costs. They have a deductible limit and once the claim exceeds this limit, top-up plans pay the excess claims. Top-up plans can be used as spare tyres in cars. Your existing health cover can be the main tyre that coincides with the deductible of the top-up plan. Once the cover of the base policy exhausts, top-up plans can come to your rescue by covering the excess claims. 

Here’s an example to understand how top-up plans work: 

  • Let’s say you have a medical insurance policy with a sum insured of INR 5 lakhs.  You want to increase the sum insured to INR 20 lakhs for sufficient coverage
  • You can do this by upgrading your policy by INR 15 lakhs, or by purchasing a new policy for INR 15 lakhs, or by getting a top-up plan for the same amount
  • Purchasing top-up plans will work out to be more feasible because of the deductible limit factor unique to them
  • You can opt for a top-up of INR 15 lakhs and a deductible of INR 5 lakhs which coincides with your existing health plan coverage
  • Now, if you incur a health insurance claim of INR 7 lakhs, only INR 5 lakhs would be paid by your base policy while INR 2 lakhs (which exceeds the deductible limit of INR 5 lakhs) would be paid by the top-up plan

Benefits of Top-up Plans

A top-up plan, as mentioned, increases the total cover without being heavy on your pockets. They act as financial backups for people with existing base policies or a mediclaim from the employer. The benefits of top-up plans are as follows - 

  • Affordable: : The most beneficial aspect of a top-Up plan is that they come at reasonable and affordable rates. This, specifically, is advantageous for older individuals as they can enhance their coverage without the premiums being too taxing on their pockets.
  • Effective against rising medical inflation: Medical inflation is unpredictably rising. Health care expenses can drain your financial resources at a moment’s notice, and if not backed up sufficiently, can push you into debt and financial crisis. Top-up is an effective tool to combat rising medical inflation. If your health insurance is backed up by top-up plans, you can enjoy optimal coverage against expensive medical treatments.
  • Tax Benefits: Needless to mention, just like other health insurance plans, there are tax benefits on top-up plans as well. The premiums paid towards the policy are allowed as a deduction under Section 80D of the Income Tax Act, 1961. You can reduce your taxable income by INR 25,000 through top-up premiums for your own plan. Moreover, senior citizens can enjoy a greater limit of INR 50, 000 on premiums paid for a top-up plan.

Limitations of a Top-up Policy

Top-up plans are useful only if a single hospitalization expense exceeds the deductible limit. That is, under every claim you make, the claim amount is measured against the deductible. For instance, if your deductible limit is of INR 5 lakhs and your claim amount is of INR 4 lakhs, then the top-up plan will provide no benefit. 

But, if the claim amount is of INR 7 lakhs and the deductible is INR 5 lakhs, then the remaining amount i.e. INR 2 lakhs would be covered by the top-up plan. However, for multiple small claims, which are lower than the deductible limit, top-up plans would not be applicable.

There is an alternative insurance product to overcome this limitation of a top-up plan. They are aggregate plans called super top-up plans. Let’s understand what they mean - 

Introduction to Super Top-up Policy

Super top-up plans are an even better solution to increasing your health insurance coverage in a cost-effective manner. While top-up policy pays only if the threshold limit is exceeded on a single hospitalization, super top-up plan provides cover if aggregate claims in a year exceed the deductible.  Thus, super top-up plans are suitable for multiple smaller claims which are not covered by top-up policies. 

Here’s an example to understand clearly: 

  • Let’s say Mr. A suffers from a heart attack and the treatment for the same costs INR 4 lakhs. He suffers from another medical illness after five months and the claim this time amounts to INR 3 lakhs
  • Suppose the sum insured and deductible in a top-up and super top-up plan are INR 5 lakhs each
  • In the first claim, neither the top-up nor the super top-up cover would pay because the deductible is INR 5 lakhs and the claim is also less than the deductible
  • In the second claim, a top-up plan would not pay the claim because the claim amount is below the deductible. However, in the super top-up plan, the aggregate claims would be considered. Since the total claim is INR 7 lakhs which is above the deductible of INR 5 lakhs, INR 2 lakhs would be paid
  • Thus, while top-up plans consider each claim independently, super top-up plans don’t and so they have a better probability of claim payment

Super Top-up V/S Top-up Policy

The major differences between super top-up and top-up plans are as follows - 

S. No. Criteria Top-Up Super Top-Up 
  1.  
FundamentalsEach claim is measured against the deductible limitAggregate claims are measured against the deductible limit
3.Claim Settlement Claim settlement is only done when a single hospitalization bill amount is more than the deductible limit.Claim settlement is done if the total bill amount is more than the deductible limit.

How to Purchase Top-up and Super Top-up Plans Online?  

Nowadays, buying and comparing medical insurance plans can easily be done digitally. To buy health insurance online, you can visit the respective health insurance company or insurance aggregator websites, select the plan to purchase, fill in all the required details, and complete payment through secured online portals. Purchasing policies online are cheaper due to the facility of comparison and are comparatively hassle-free. 

Conclusion- 

Top-Up and Super Top-Up plans are designed to supplement the existing policy to cover extensive healthcare costs. They do so by being affordable. They are great financial cushions that ensure sufficient coverage and take the financial load off of you in times of medical crises. 

So, opt for these plans for enhancing your health insurance coverage. But, keep in mind that to be covered optimally, it is important to choose a deductible at par with the sum insured of the existing policy, so that the deductible limit is covered by the base policy and a claim amount crossing that threshold can be covered by the top-up or super top-up policy you buy.

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