You bought a health insurance plan a few years ago, hoping it would provide adequate health insurance coverage. However, in the last few years, medical inflation has grown faster than the average inflation rate. As a result, you feel the health insurance cover that you bought a few years back is inadequate as of today. In such a scenario, you can buy additional coverage in the form of a top-up or a super top-up health insurance plan. In this article, we will understand what is a top-up and a super top-up health insurance plan, the differences between them, and which one you should take.
What is a top-up health insurance plan?
A top-up health insurance plan pays when the hospitalisation claim is above a specified threshold, known as the deductible. For example, suppose you buy a top-up plan with a sum assured of Rs. 10 lakhs and a deductible of Rs. 3 lakhs. In this case, the top-up plan will pay only if the claim amount exceeds Rs. 3 lakhs.
If the claim amount is Rs. 4 lakhs, the top-up policy will pay Rs. 1 lakh after considering the Rs. 3 lakhs deductible. If the next claim amount is Rs. 2 lakhs, the top-up policy will not pay, as it is below the Rs. 3 lakh deductible.
How to pair the top-up health insurance plan with your base plan?
If you feel your base health insurance policy coverage is inadequate, you can buy a top-up policy with the deductible as the base health insurance policy amount. For example, suppose you have a base health insurance policy with a sum assured of Rs. 5 lakhs. In this case, you can buy a top-up policy of say Rs. 10 lakhs with a deductible of Rs. 5 lakhs.
If the claim amount is up to Rs. 5 lakhs, the base health insurance policy will pay. If the claim amount exceeds Rs. 5 lakhs, the base health insurance policy will pay Rs. 5 lakhs, and the top-up policy will pay the incremental amount (as the deductible is Rs. 5 lakhs), up to the top-up policy sum assured.
It is important to note that in a top-up policy, the deductible applies separately to each claim, and only the incremental amount above the deductible is paid. For example, if there are 3 claims in a policy year, for each claim, the deductible will be applied first, and the incremental amount, if any, will be paid up to the sum assured, as per the policy terms and conditions.
What is a super top-up health insurance plan?
A super top-up health insurance plan pays when the hospitalisation claim exceeds the deductible. The deductible is calculated by taking the total of all claims made during the policy year. So, if there are multiple claims in a policy year, the total of all the claims is added up. Once the total of all claims made so far exceeds the deductible, the incremental claims will be paid (total up to the sum assured), as per the policy terms and conditions.
For example, suppose you buy a super top-up plan with a sum assured of Rs. 10 lakhs and a deductible of Rs. 3 lakhs. In this case, the super top-up plan will pay when the total of all claims in the policy year exceeds Rs. 3 lakhs.
If the first claim during the policy year is Rs. 2 lakhs, the super top-up policy will not pay, as the claim amount is lower than the Rs. 3 lakhs deductible. If the second claim during the policy year is Rs. 1.5 lakhs, the total of the two claims during the policy year will be Rs. 3.5 lakhs. In this case, the total claims amount (Rs. 3.5 lakhs) exceeds the deductible of Rs. 3 lakhs. The insurance company will pay the incremental amount of Rs. 50,000, which exceeds the deductible of Rs. 3 lakhs.
If the third claim during the policy year is Rs. 2 lakhs, the total of the three claims during the policy year will be Rs. 5.5 lakhs. In this case, the insurance company will pay the entire Rs. 2 lakhs claim amount as the Rs. 3 lakhs deductible was reached in the 2nd claim itself.
|
Super top-up cover = Rs. 10 lakhs with Rs. 3 lakhs deductible |
Total claim amount during policy year |
Claim paid |
|
1st claim = Rs. 2 lakhs |
Rs. 2 lakhs |
Nil |
|
2nd claim = Rs. 1.5 lakhs |
Rs. 3.5 lakhs |
Rs. 50,000 (incremental amount above deductible) |
|
3rd claim = Rs. 2 lakhs |
Rs. 5.5 lakhs |
Rs. 2 lakhs |
Difference between top-up and super top-up policies
The major difference between the two policies is that a top-up plan works on a per-claim basis, wherein the deductible applies separately to each claim. For each claim, only the incremental amount above the deductible will be paid as per the policy terms and conditions.
In a super top-up plan, all claims made in a policy year are added. If the cumulative claims amount exceeds the deductible, the incremental amount above the deductible will be paid as per the policy terms and conditions. Once the deductible is exceeded, all subsequent claims during the policy year will be paid (total up to the sum assured), subject to policy terms and conditions.
Which policy should an individual take?
In India, most people with health insurance cover are underinsured. Hence, they need additional health insurance cover. With a top-up or super top-up plan, an individual can significantly increase their health insurance cover without a substantial increase in premium amount.
If the individual is healthy and needs coverage against any big claims or critical illnesses, they may consider a top-up plan. If the individual is vulnerable to multiple hospitalisations during the policy year, they may consider a super top-up plan.
The premium for a super top-up plan is higher than that of a top-up plan. However, a super top-up plan offers better value for a policyholder.
