How does top up works in health insurance plans

Renjith R GGeojit BNP ParibasWe are all familiar with Life Insurance and to give them the due, Life Insurance Companies have actually done a appreciable job of promoting the product. We can hardly find a regular employed adult without having a Life Insurance, either as Term Insurance, Whole Life Insurance, ULIP, Money Back etc. But how many do actually have a Health Insurance, in its purest form, although some Life Insurance companies do give Health Insurance cover riders along with the full Life Insurance cover.So what is Health Insurance?In Simple terms, it is an insurance that is designed to help us meet unforeseen health care and hospitalization requirements. As per FICCI study, only about 30% of our population has any sort of health care facility. These could be in the form of insurance, free health facility etc. But there is need for huge push towards Health Insurance. Why is then Health Insurance care so poor in India? Health Insurance is something we forget to notice, either due to lack of awareness or may be feel nothing can happen to our life. This is the biggest misconception that we have. With the rising number of cases of diseases mainly due to the misappropriate standard of living being the major cause of diseases and the ever increasing cost of health care and hospitalization, we are all making a big mistake by ignoring Health Insurance. Health Insurance has come to occupy an important part of a person’s annual Tax saving option. But we don’t realize that the reason why the premium paid upto Rs15000 for self and dependant families and an additional Rs20000 for parents is exempted from Taxable income. The reason is considering the necessity of the product. Health Insurance covers come in the form of indemnity cover, personal accident, critical illness and others which support hospital treatment. But will just a normal cover ensure that all will be taken care of. Is it not possible that our expense for a treatment can overshoot the sum insured? What will we do? We are here discussing about Top Up Health Insurance.

Consider an individual; he takes a Family cover of around Rs3Lakhs for his family which for example let’s say consists of him, spouse and two children all depended on him. All three together have the cover. Suppose unfortunately due to an unfortunate emergency the full amount or the major part of the Sum Insured is exhausted, what would you do to meet any additional expense that you might face. You will need to pay the remaining from your savings which in turn can affect other priorities. In such cases it makes sense to have a top up plan. Having a Top Up Plan along with the normal health cover is as simple has having a Stepny tyre in your Car. It is assumed that in case one tyre bursts, the stepny will help.

Top Up plans in Health Insurance hence gives that additional cover over and above the normal cover. IF and when the normal cover gets exhausted the Top Up Plan gets activated and you can meet any additional expense in the hospitalization requirement. A top plan not only helps out if you have a normal cover but also in the instance of your cover getting exhausted from what is provided by your employer as well. Many a times we have come across people who believe that when they have a cover from the employer why should they have a top up or a separate cover. Of course when it comes to Group covers, it comes with the cover for pre existing diseases, and maternity (recently some companies have introduced maternity cover but with conditions attached). Companies will always try to cut short their expenses and can tweak their policies each year, this can hurt at times. Rising costs will make employers think about the benefits they provide and with government run insurance companies being asked to hike the premiums by 50%, many companies who have their group cover from these organizations will have to rework their strategies. So how does these Top Up Plans work.Let us consider an example. Let us take an example for a Top Up Plan. It comes with a Sum Insured of Rs10Lakhs with a deductible of Rs3 Lakhs. Now what does that mean?Suppose a person is hospitalized and has a normal indemnity cover of Rs3 lakhs. Due to the seriousness of the illness or due to part of that amount having already been utilized the cost of the current treatment goes beyond the available limit of Rs3 Lakhs and ends up somewhere around 4 Lakhs. The additional amount of Rs1 Lakh will then be required to be met from other sources most probably from savings. When you have a Top Up Cover, this additional requirement can be met. When we says that a Top Up plan has a deductible of Rs3Lakhs for a Rs10Lakhs cover, it means, for any bill amount upto Rs3Lakhs will be met by the normal cover and any amount beyond Rs3Lakhs will be met by the Top Up Plan. Here the additional amount of Rs1Lakhs will be met from the Top Up Plan.

Having a Top Up plan as a standalone cover is possible but it is not advisable to do that. Suppose the treatment costs don’t add up much, citing the above example, in case the treatment is running only upto Rs2Lakhs, again you have to depend on other sources. Hence its advisable to have a Top Up along with a normal Health Cover. The above can also work in cases where you have cover from your employer as well. In Top Up plans the usual mandatory health check up are also at a higher age than what is mentioned for normal cover. Also the Top Up plan can also be taken from different insurer than where you have the normal cover. This can be considered based on the benefits of these plans. Both your indemnity policy and the top-up plan can be claimed together for single hospitalisation. The first condition to be met is the threshold of the top-up plan. Another criterion is that a top-up plan normally works only on a single incidence of hospitalisation.This means that you can use the top-up plan only if your medical bills exceed the deducible amount during a single hospitalisation by a single member. If relapse happens within 45 days of discharge from hospital, it is usually considered single illness. However, if the customer is hospitalised again for the same illness but after 45 days from discharge, it is usually considered a fresh illness. So, the deductible has to be crossed for every single illness for policy benefits to commence.

There are few plans which do not have the limit of single claim but can be claimed for any illness over deductible amount for entire year. This plans are known as super top ups.So how do you choose a plan. Higher the deductible the cheaper the plans usually are. Choose the plans not just on the basis of Premium but also consider the benefits. More the services and benefits, the higher can the premiums are. Hence choose the right plan but make sure to choose a plan.