We are all used to keeping a spare tire in our car to take care of the dreaded and unexpected punctured tires. The spare tire has no use but becomes crucial as ready-to-use standby whenever a puncture happens. Top-up health plans are quite similar to this extra tire.Once the sum insured limit of your health plan gets exhausted, the top-ups come across as a Stepney to your health plan and get you reimbursement for the extra expense.
Most of us buy a health insurance policy at the early stages of our career. However, the healthcare inflation has been rising at an exceptional rate of an average of 15% in India. That means that a health plan of 5 lakhs which was sufficient for a family of four becomes insufficient for them within 5-6 years. To take care of the gap, you can purchase a second policy, but the cumulative premium of the two will come to a sizeable chunk which can become unaffordable or can hurt your finances significantly. The rescue here is a top-up and super top-up policy. Very few brands offer both these options. HDFC Ergo is one of the leading healthcare insurance providers providing both these supporting options to its clients.
Understanding top-up cover
Foremost let us understand the fundamentals of a top-up cover in detail. Let us take an example. You might have brought a health care policy of about three lakhs for a family of four a couple of years back. It will be grossly insufficient now. To cover the gap, you take an additional top-up cover of about four lakhs with a deductible of three lakhs. Thus, now if you get hospitalized and the total expense stands at Rs.5 lakhs; your insurer would pay Rs.3 lakhs, and the remaining amount would be taken care of by your top-up cover.
What is Deductible?
A deductible is a critical component of a top-up cover. Basically, it is the specific cut-off amount till which your top-up plan would not provide you with any coverage. Most of the time, it is the maximum amount which your original health plan policy would pay for you at the time of hospitalization.
It is the deductibles which make your plan cheaper. Let us take the example of HDFC Ergo. It has a regular indemnity health plan called Health Suraksha. Under it, if a 35-year old gets a top-up plan of Rs.5 lakhs with a deductible of Rs.3 lakhs; his annual premium would be about Rs.3000. However, if he takes a regular health plan of Rs.5 lakhs; his yearly premium would stand at around Rs.7500.
Benefits of a top-up health plan
We now know what a top-up health cover is. Next, let’s throw light on some of the significant benefits of opting for a top-up health plan instead of a regular indemnity plan.
- The first most attractive benefit of a top-up health cover is its cost-effectiveness. As evident from the example above; it saves you a sizeable premium in comparison to you extending your basic cover or purchasing a second policy.
- The plan can be purchased even if you do not have any health coverage though the clause of deductible would apply here as well.
- You can get the top-up cover in both individual and family floater versions.
- The top-up covers can be purchased from the same health insurer, or you can buy it from a separate health insurance provider as well without any hassles.
- The plan gives you the flexibility of choosing your deductible limit.
- The features and benefits offered in a top-up plan are similar to your regular health plan, and thus its clauses are not difficult to comprehend.
- The premium paid for your top-up cover also enjoys the tax benefits as stated under section 80D of Income Tax Act, 1961.
Limitations of a top-up health plan
The glitch in a top-up cover is related to the clause of deductibles. This plan does not take care of multiple hospitalizations in a year. For instance; if a person with a top-up cover of Rs.5 lakhs with a deductible of Rs.3 lakhs gets hospitalized twice with each hospitalization cost amount to about Rs.2.50 lakhs; the top-up cover would not kick in even though the cumulative amount stands at Rs.5 lakhs.
To combat this drawback, HDFC Ergo offers a super top-up plan which is based on your total health cost in a year irrespective of the number of times you are hospitalized. A super top-up plan is nothing but an improved version of the basic top-up plan that offers greater coverage to clients in the same cost-efficient manner.
The medical costs are spiraling each day and your basic health cover will never prove adequate. The best way out is to bolster your basic health-plan with a top-up cover. While many insurance companies do provide such offers, HDFC Ergo’s top-up plan and super top-up plans are one of the best ones available in the market today.