In multiple cases, people have to pay from their pockets to clear hospital bills as they exceed the base amount of their health insurance. However, a simple way to avoid this is buying a top-up plan along with a health plan. In case you exceed the base amount of your health insurance, you can claim the rest from the top-up plan.
There are two kinds of top-up plans
Top-up plan: A top-up plan works on a per claim basis. That is, you can claim from the top-up only after you have exhausted your health insurance claim amount for a particular claim.
Super top-up plan: Now for super top-up plan, there is no threshold limit on per claim basis; it is applicable only after you have exceeded the total amount.
For example, let’s assume you have a ₹2 lakh health policy and a ₹3 lakh top up plan. In a particular year, you make three claims of ₹50,000, ₹2 lakh and ₹3 lakh. So in these cases, the first claim will be covered by the health insurance. For the second claim of ₹2 lakh, your health plan will cover ₹1.5 lakh, and you can get the rest from the top-up. And you would have to bear the entire expenses for your third claim.
Now, if you have a ₹3 lakh super top-up policy along with your ₹2 lakh mediclaim, then in the first two cases, you will get the same benefit as a top-up plan. Plus for the third one, you can claim ₹2.5 lakh from the super-top plan. And pay the rest, i.e. ₹50,000, from your pocket.
So, in case of senior citizens or critical/chronic illnesses, when the chances of multiple claims are higher, it makes more sense to buy a super top-up plan, said Gaurav Mashruwala, Sebi-registered investment advisor.
Why buying a top-up plan is more beneficial than increasing the base amount for your health insurance plan?
"First of all, buying a top-up plan is simply more cost-effective than increasing the base amount for your health plan." Mashruwala added.
On average, the yearly premium amount for a top-up plan is ₹1,000 for every ₹1 lakh cover. In comparison, for a 30 to 35-year-old individual, the premium amount for a basic ₹3 lakh health plan would be around ₹6,000 per year.
Second, if you wish to increase the base amount of your health insurance plan then there is a yearly limit to it, which is determined by the insurer. Top-up plans don’t come with such conditions.
"Like an investment portfolio, one should also have a health insurance portfolio too. And it is always more beneficial to have more than one product in that, like a base insurance plan and also a top-up plan," Mashruwala concludes.