Do your math before buying a top-up plan

The high cost of medical treatment, especially during the pandemic, have underlined the need for an optimum health insurance cover. A plan that can provide adequate coverage in case of an emergency. Even if one has an insurance plan in place, buying a health top-up plan can be a good idea as it provides additional financial assistance at comparatively lower costs.What is a top-up plan?It is a regular indemnity health insurance policy that comes into force once the claim amount exceeds the deductible limit. The hospitalisation cost below the deductible limit is either borne by the insurer or the policyholder.Broadly, there are two types of top-up plans. First is a regular top-up plan, where the deductible is applied to each claim and the second is a super top-up plan, where the deductible is applied to the overall claims amount in a year. “People should be careful about what they are buying–per claim deductible or annual total based deductible plan,” warns Biresh Giri, Appointed Actuary, Head of Product Development & CRO, Acko General Insurance.Suppose a person has a regular base health insurance policy of Rs 6 lakh and has bought a top-up or super topup plan with net coverage of Rs 15 lakh and deductible limit of Rs 6 lakh. The insurance will cover the hospitalisation bills in different ways in different scenarios (see table). 77689091Cost effectivenessYou may consider buying a combination of a regular policy and a top-up or super top-up plan. However, you should do your math before signing up for any scheme. Make sure that the deductible of the plan is not higher than the sum insured under the regular health policy.For instance, if a 30-year-old man buys a regular health policy of Rs 20 lakh, the premium will come to around Rs 20,960. If the same person buys a regular health policy of Rs 6 lakh plus a top-up or super top-up plan of Rs 15 lakh (with Rs 6 lakh deductible) from the same insurer, then he has to pay a premium of around Rs 7,548 or Rs 7,938 only. This means he will save around Rs 13,412 or 64% of the cost, if he buys a combo of regular and top-up plan. He will be able to save Rs 13,022 or 62.1% if he signs up for a regular and super top-up plan combo (See table). 77689098With the rising number of Covid-19 cases, the need for a health cover has become more important than ever. Rakesh Goyal, Director, Probus Insurance, an online insurance broking firm, says, “Most of the top-up or super top-up plans cover the Covid-19 treatment as well as other illnesses.”However, these plans come with a waiting period which varies with the platform and the plan. “Generally, when you buy a top-up/super top-up plan, it provides a Covid-19 cover after a fixed tenure of 30 days. However, it is important to check the policy documents before buying a plan,” says Naval Goel,Founder & CEO, PolicyX.com. One can also consider buying a super top-up plan to complement the group cover from an employer.Claim settlementWhen you file a claim using base health policy as well as the top-up or super top plan, the claim settlement will take place as per the base policy wordings and the top-up/super top-up claim settlement will take place as per the top-up/super top-up plan wordings.For instance, if a top-up plan stipulates 10% co-payment, then you will have to share 10% of the hospitalisation cost or admissible claim along with the insurer. However, if the plan does not have any co-payment clause, then you will not have to pay anything from your pocket.The claims process is comparatively hassle-free if you buy a top-up plan from the same insurer. Also, the administrative expenses are directly covered under the plan. However, if you buy a top-up plan from a different insurer, you will have to file the claim papers for top-up once the claim is settled for the base health policy. “The payout during the claim process would not be cashless if you buy a top-up plan from a different insurer,” says Goyal. This means you will have to pay the hospital bills first and then get them compensated from the insurer at a later stage.(Graphics by Abdul Shafiq/ET Prime)

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