The ongoing Covid-19 pandemic has reinforced the absolute criticality of having health insurance protection for your family. Serious medical emergencies of any kind at a time of skyrocketing hospitalisation expenses can easily ruin our finances-something that can be avoided with adequate medical insurance cover for ourselves and our dependent family members.
However, one might never be sure how much coverage could be considered “adequate”, especially in the long term. What seems “adequate” today may be insufficient after a few years, and your existing sum insured might not be enough to meet the hospitalisation requirements of all the insureds in your family. A cost-effective way to protect against future medical requirements and beat medical inflation could be going for a super top-up health insurance policy. Let’s understand how a super top-up plan can benefit us.
Features of a super top-up health policy
A super top-up insurance product is similar to a regular health product in many aspects like covering the insured against hospitalisation bills and medical expenses, but they are different in terms of coverage initiation. Super top-up coverage starts after your cumulative eligible medical expenses exceed the deductible limit mentioned in the policy. It means you have to pay for medical/hospitalisation expenses up to a specific limit (i.e. the predefined deductible limit) from your pocket or through your regular health policy to activate the super top-up policy which will then cover the excess amount up to the policy coverage limit.
For example, suppose you have taken a super top-up health policy of Rs 10 lakh with deductible of Rs 5 lakh. You also have a regular health policy of Rs 5 lakh. Let’s suppose you’re hospitalised on three occasions during the policy year wherein the bill was Rs 4 lakh during the first time, Rs 3 lakh during the second time, and Rs 4 lakh during the third time. Now, your regular health policy (worth Rs 5 lakh) will cover your first hospitalisation. However, your regular policy will not be able to cover for the second hospitalisation in full as you’ve already claimed Rs 4 lakh for your first hospitalisation. As such, you will use the remaining Rs 1 lakh from your regular policy, and the remaining Rs 2 lakh claim will be settled by your super top-up policy. The third hospitalisation bill of Rs 4 lakh will be completely taken care of by your super top-up policy as you have already fulfilled the deductible limit clause.
Super top-up policies come at a very low premium primarily owing to the deductible clause. Also, premiums paid for a super top-up policy are eligible for tax deduction benefits under Section 80D of the I-T Act. The norms and waiting periods for pre-existing conditions and limitations for coverage of specific illnesses are usually similar to regular health policies. Most of the health insurance companies allow cashless claim benefits on their super top-up policies. Also, super top-ups come with different deductible limit options depending on your policy and the insurer, and they are available in individual as well as floater variants.
How super top-up policies differ from top-up insurance
Both super top-up and top-up plans settle claims above a predefined deductible limit by offering excess coverage at a low cost. However, they differ in how the claims over the deductible limit are entertained. While top-up plans do so on a single-case basis, super top-up plans do the same on a cumulative basis. To understand this, let’s check another example.
Let’s assume you have a regular health insurance plan of Rs 5 lakh (which is also the deductible limit) and a top-up or super top-up plan worth Rs 10 lakh. If you are hospitalised on one occasion during the policy year and the bill is Rs 8 lakh (which is Rs 3 lakh more than your regular medical insurance coverage of Rs 5 lakh), your top-up plan will be able to reimburse the remaining Rs 3 lakh. However, let’s now assume you were twice hospitalised during the policy year and your bills were Rs 4 lakh on each occasion. While the first claim can be settled with your Rs 5 lakh regular health insurance plan, your top-up plan will be of no use to settle the second claim as the bill is lower than the deductible limit. However, if you have a super top-up plan, you’ll be able to claim the second bill of Rs 3 lakh through it as your cumulative hospitalisation expenses of Rs 8 lakh are more than the deductible limit of Rs 5 lakh but less than the super top-up sum insured of Rs 10 lakh.
Important things to keep in mind when getting a super top-up health policy
When getting a super top-up policy, make sure that you opt for the right deductible limit. Ideally, that should be the limit of your regular health insurance cover. You should also check the list of hospitals available in the super top-up policy which might be different from your regular policy’s list if purchased from a different insurer.
Also bear in mind that there are some benefits that a regular health policy may not allow you if the coverage amount is too low. For example, air ambulance facilities and uncapped room rent coverage may not be allowed in a low-coverage regular policy. Such a policy may also put riders in the treatment of certain diseases. So, your basic health insurance policy size should be adequate to allow coverage for facilities that you may need at the time of hospitalisation. Once you know the size of your base health policy requirement, you can get a super top-up of adequate size by putting deductibles as per your base policy limit. Other critical considerations while selecting a super top-up plan include options like reload/restoration facility, no-claim benefit, maximum pre, and post-hospitalisation coverage, cover for the organ donor and the option to renew the policy for a lifetime.
In conclusion, you’ll be well-advised to compare your options thoroughly wherein the premium cost shouldn’t be the only consideration. You must also check the coverage amount, network hospitals, comprehensive protection benefits, and claim settlement records before finalising a particular super top-up policy.
(The writer is CEO, BankBazaar.com)