Tips to Get the Maximum Benefit of Your Top-up Plan

Why Health Insurance?

One cannot predict the future despite earning well and leading a wealthy life. In case of any unforeseen health events, your life shatters. All your financial, physical, mental and social aspects got imbalanced. So, a health insurance plan is necessary to safeguard yourself and your family and protect their wealth from being depleted in any medical emergency. 

So, the basic requirement for a health insurance plan is obvious. But many times, you may realise that your basic health insurance plan is insufficient to provide adequate coverage to you and your family. That is when you need to enhance your health insurance coverage. The options you have to enhance your health insurance coverage is by:

1. Requesting your existing health insurance company to enhance your coverage, or
2. Opting for another health insurance plan

However, these options will be quite expensive because both these plans would consider your coverage from INR 1. However, you already have the initial coverage of INR 5 lakhs. All you need is additional coverage beyond INR 5 lakhs, in case it is necessary for any given year. This is where the concept of a top- up and super top-up health insurance plan comes into play.

What is a Top-up Plan in Health Insurance?

The top-up plans complement the normal health insurance plans. When your normal policy cover is exhausted, the top-up plan takes charge and compensates for the additional treatment expenses. For a little more premium, you can avail of the extended protection apart from your health insurance with deductibles in health insurance.

The difference between a top-up and a super top-up plan is that top-up plans consider the deductible in each and every health insurance claim. In contrast, a super top-up plan considers an aggregate deductible for the entire year. Let’s see the explanation with an example.

If both A and B have a base health indemnity plan of INR 5 lakhs each and A opts for a top-up plan of INR 10 lakhs with a deductible of INR 5 lakhs while B opts for a super top-up plan of INR 10 lakhs with a deductible of INR 5 lakhs.

Till the claim for that particular year is less than INR 5 lakhs, there is no worry, as the base health indemnity plan of INR 5 lakhs will take care of the claim. The concern arises only when the claim exceeds INR 5 lakhs deductible limit. So, for argument's sake, let us consider INR 5 lakhs claim is already over, and there is subsequent hospitalisation of INR 3 lakhs.

1. The top-up plan doesn’t get triggered as the claim amount is less than INR 5 lakhs (deductible limit). And since the base plan is already exhausted, the entire amount needs to be paid out-of-pocket for A.
2. However, B gets lucky here as the super top-up plan gets triggered as the aggregate claim for the year is more than INR 5 lakhs (the deductible limit), and so the additional amount of INR 3 lakhs would be paid by the super top-up Plan, and B doesn’t need to pay anything out-of-pocket!

However, if the single claim amount was INR 7 lakhs, then the initial amount of INR 5 lakhs would have been paid by the base health indemnity plan, and the additional amount of INR 2 lakhs would be paid by both the top-up and the super top-up plans.

So, top-up and super top-up health insurance plans are indemnity plans with deductible limits, but super top-up health insurance plans are slightly more expensive than top-up plans.

Here are the benefits of top-up and super top-up plans:

• You get a higher sum insured with a lower premium than another base health indemnity plan.
• The premium you pay towards your top-up and super top-up plans would qualify for tax exemptions under section 80-D of the Income Tax Act up to INR 1,00,000 for self, spouse and dependent children and additional tax benefit for premiums paid for parents as well.
• You may get a family discount on many top-up plans.
• If taken at a younger age, no pre-medical screening is required.

When to Choose a Top-up Plan?

Usually, in two circumstances, an insurer opts for a top-up plan-

1. A top-up or a super top-up plan is the best option when your usual insurance cover does not provide sufficient coverage to satisfy your insurance needs.
2. If you wish to enhance your health insurance coverage at a lower cost, you need to opt for a top-up or a super top-up plan rather than another base plan, as it would be more cost-effective.

Tips to Make Most of Your Health Policy Top-up Plan

You need to focus on the below-mentioned important components of a top-up plan to make your top-up plan the best for you-

1. Work Out the Expense

Top-up and super top-up health insurance plans are cheaper than base indemnity comprehensive health plans, but you still need to pay an additional premium. So, when you opt for a good top-up and super top-up health insurance plan, ensure you work out the premium to understand your total annual expense.

2. Policy Limits and Deductibles in Health Insurance

Understand the terms and conditions of your plan, the concepts of deductibles, and when your policy claim can be triggered so that you can get adequate coverage and an easy claim.

3. Stick with One Insurance Company for Ease of Claim

Choosing the same insurer for your top-up plan is always advised so that your waiting periods can be considered together for claims for pre-existing ailments.

4. Opt for the Top-up or the Super Top-up Plan on the Same Date as Your Base Health Plan

Ideally, you should opt for the top-up or the super top-up plan on the same date as your base health plan, so there is no ambiguity at the time of claim. To explain this, let me help you with an example.

Suppose you have opted for a base health plan of INR 5 lakhs from 1-Jan-2022 till 31-Jan-2022 and your super top-up plan of INR 10 lakhs with a deductible of INR 5 lakhs from 1-July-2022 till 30-June-2023. Now, you file a claim of INR 5 lakhs in April 2022, which is paid by your base plan.

Now, again in Aug 2022, if you file an additional claim of INR 2 lakhs, your base plan cannot pay any more because the same is exhausted already. However, your super top-up plan will also not pay because it would consider INR 5 lakhs deductible from July 2022 to June 2023.

5. Maximise Your Tax Benefits

You can get up to INR 1,00,000 tax exemptions under section 80-D for the premium you pay for yourself, your spouse, children and dependent parents for both a base plan and a top-up health plan. So, if your amount exceeds INR 25,000, you can make your spouse the primary policyholder to maximise the tax benefits.

Read more - Health Insurance Tax Benefits

Remember: Health insurance renewal is important to be done on time to get continuity of benefits.

Read more - 

• A to Z about Top-up and Super Top-up Health Insurance Plans
• Increase Your Health Insurance Coverage With Top Ups