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As Jayesh poured through his wife Rajni’s discharge summary and hospitalization bills, he rued the fact that he had not listened to his friend’s advice, given a few years back. His friend had advised him to supplement his employer’s health insurance policy with a top-up health plan. Jayesh had just shrugged off the suggestion then.

The hospitalization and related expenses for his wife’s kidney ailment exceeded his employer’s health insurance policy by Rs 4 lakhs. This amount had to be paid by him. He had no option but to dip into the funds saved meticulously over the years for their children’s higher education. If only he had heeded to his friend’s advice and bought a top-up plan, he wouldn’t have had to use the funds meant for his children’s future. You may be wondering what a top-up health plan is and how it could have saved the day for Jayesh and Rajni. Read on to know more: 

What is a Top-up Health Insurance Plan?

A top-up health insurance plan is a reimbursement plan which has a deductible or a threshold limit and only after this threshold limit has been crossed does the top-up plan comes into effect. The deductible/threshold limit is the amount not covered by the plan. One has to choose the deductible/threshold limit while buying the plan. The expenses till the threshold limit are to be met either from your pocket or by way of an existing health insurance plan/employer’s health insurance plan.Top-up Health Plan

In the case mentioned above, if Jayesh had supplemented his employer’s health plan with a top-up plan keeping his employer’s plan’s sum assured as deductible, then on exhaustion of his employer’s plan’s sum assured, the top up plan would have kicked in saving him from paying from his pocket.

Must Read: All About Child Health Insurance in India

Let’s see one more illustration for better clarity:

Illustration:

Lalit has a base health insurance cover for Rs 3 lakhs and a top-up health plan for Rs 5 lakh with a deductible of Rs 3 lakhs. Let us look at some scenarios to understand how a top-up plan functions:

Details

Claim 1

Claim 2

Claim 3

Claim amount

Rs 2 lakhs

Rs 4 lakhs

Rs 10 lakhs

Amount paid by a base health plan

Rs 2 lakhs

Rs 3 lakhs

Rs 3 lakhs

Amount paid by the top-up plan

Nil

Rs 1 lakh

Rs 5 lakhs

Amount paid from own pocket

Nil

Nil

Rs 2 lakhs

For Claim 1, the amount is paid by the base health plan and the top up plan will not be invoked as it comes into effect only after a threshold of Rs 3 lakhs.

In Claim 2, the amount of Rs 3 lakhs will be paid by the base health plan and since the deductible of Rs 3 lakhs is met, the top-up plan comes into effect and the balance Rs 1 lakh is paid by the top-up plan.

In Claim 3, the initial Rs 3 lakhs will be paid by the base health plan and since the deductible of Rs 3 lakhs is met, the next Rs 5 lakhs will be paid by the top-up plan and the balance Rs 2 lakh from own pocket as both plan limits are exhausted.

Key Points To Note

A top-up plan is meant to supplement an existing health insurance plan or employer’s health insurance plan. It is also not necessary for you to buy your base health plan and top-up plan from the same insurance company (though administratively it will be less cumbersome for you to buy both from the same company so that at the time of a claim, you need not deal with multiple companies). It can be taken on an individual or floater basis.

You don't need to have a base health plan to buy a top-up. You can decide an amount up to which you are financially comfortable to pay from your pocket and for anything above that, you can buy a top-up health plan. In such a case you can skip a base health plan and just go for a top-up plan keeping the amount that you are willing to pay as the deductible for the top-up plan.

Read: Best Family Floater Health Insurance Plans in India

Illustration:

Manish is a self-employed chartered accountant. After an assessment of his finances, he concludes that in case of a health emergency, he is in a position to spend up to Rs 4 lakhs from his resources. Accordingly, he does not buy a base health plan and instead buys only a top-up plan for Rs 10 lakh with a deductible/threshold limit of Rs 4 lakhs. In the case of hospitalization, till Rs 4 lakhs Manish will pay on his own and after this threshold is crossed, the top-up plan will take care of further expenses till the sum assured limit.Health Coverage Exhausted

However, the above option may be suitable only for those who have considerable savings and can pay up to a certain limit from their pocket. For all others, it is best to go for a base health plan and supplement it with a top-up plan.

Considering the rapidly rising healthcare costs, a top-up plan provides a cushioning effect in case of a major ailment or surgery where the basic health insurance plan falls short of meeting the expenses. As you read this, you may be wondering why not buy another health insurance plan for an additional sum assured or enhance the sum assured for your existing health plan instead of buying a top-up plan where a deductible is applicable? 

Why You Should Buy a Top-up Plan?

Since a top-up plan comes into effect only after a certain threshold limit, the risk for the insurer is lesser compared to the base health plan. The base health plan will take care of the expenses, the majority of the times and the top-up will be invoked only exceptionally. As such premium for a top-up plan is lesser than that of a base health plan.

For better clarity, giving below the premium applicable for a base health plan and top-up plan of the same insurance company for a 40-year-old Male:

Plan details

Sum Assured

Annual Premium

Base health plan

Rs 3 lakhs

Rs 7,109/-

Top-up plan

Rs 5 lakh with deductible of Rs 3lakhs

Rs 3,203/-

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The math shows that it is beneficial to buy a top-up plan rather than going in for another base health plan.

Also, in top-up plans, most insurers do not ask for medicals up to the age of 55 years whereas it is 45 years for base health insurance plans. Except for the deductible, most top-up plans functions and have similar features as a base health plan. However usually no-claim bonus feature is not available.

Important Points To Check Before Buying a Top-up Plan

  • Check for the waiting period for pre-existing ailments. A few insurers have now started issuing policies with a much shorter waiting period such as 12 months for pre-existing diseases.
  • A very important point to note is regarding the events in which the top-up will get triggered. Most top-up plans require the deductible limit to be crossed for every single hospitalization.

For eg: Sumesh has a base health plan for Rs 3 lakhs. He has a top-up health plan of Rs 5 lakhs with a deductible of Rs 3 lakhs. Sumesh is hospitalized twice in a policy year with claims of Rs 2 lakhs and 2.5 lakhs respectively. He has exhausted his base plan sum assured of Rs 3 lakhs. However, the top-up will not be invoked as both individual claims are less than the deductible of Rs 3 lakhs (though cumulatively they cross the Rs 3 lakh deductible).

The same is the case with a family floater top-up plan under which two members are hospitalized with individual bills of Rs 2 lakhs and Rs 2.5 lakhs respectively. You should clarify whether the plan mandates per-claim deductible or overall/cumulative deductible.

  • To understand the guidelines on what is considered as a single illness. Most insurers consider a relapse within 45 days of discharge from hospital as a single illness. However, if the insured is hospitalized again for the same illness but after 45 days, then it is considered as a fresh illness and the deductible limit will have to be met afresh for the top-up plan to be triggered.

A super top-up plan can be helpful concerning the deductible limit.

What is a Super Top up Plan?

A super top up health insurance plan is an improvised version of a top up plan. It comes into effect if the cumulative claims in a policy year exceed the deductible amount, thus making it more flexible than a simple top-up plan.

For eg: In Sumesh’s case, if he had a super top-up plan then on his second hospitalization, the super top-up plan would have come into effect as the cumulative deductible of Rs 3 lakh was met and Rs 1.5 lakh would have been paid by the super top up plan.

The key takeaway is that super top up plans cover ‘multiple’ hospitalizations and they look at the aggregate claim to decipher whether the threshold has been met. 

Conclusion

Top up plans help you to enhance your coverage amount at nominal premium rates. Most health plans are in the range of 3-5 lakhs and a major ailment or surgery can wipe out your employer’s health plan or your base health plan. You may end up paying a significant amount from your resources. This is where a top up plan can protect you. Also, with a super top up plan, you are in a better position as it considers aggregate deductible and this can be especially useful in floater policies or for major ailments where multiple hospitalizations can take place.

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