A top-up policy is an additional insurance, providing coverage above an existing health insurance. In other words, when you purchase a top-up cover, you get coverage over and above what is available in your original policy. You can purchase the regular policy and top-up policy from the same or different companies. A top-up policy has similar benefits and conditions as a normal health insurance policy. A top-up policy usually works out to be cheaper than taking a new policy or enhancing limits of your existing policy. But wait, everything cannot be positive about this. There must be a catch somewhere.
So, what is the catch?
The main criterion is that a top-up plan can be used only if expenses you claim are beyond a certain limit, known as the “deductible”. This limit is decided in advance and premiums are calculated accordingly. So a top-up plan with a higher deductible has a lower premium. Further, a top-up plan usually works only on a single occurrence of hospitalisation. In effect, you can use the top-up plan only if your medical bills exceed the deducible during a single hospitalisation by a single member.
Let’s understand the working of a top-up plan in the following cases:
Given the restrictions, are top-up plans good for you?
A top-up plan is an economical and simple option to augment your health-cover. Top-up plans are useful only when you already have an existing policy and expect that to be insufficient. In the example above, if you feel Rs. 2 lakhs is not sufficient to cover your entire family, you can opt for a top-up plan which works out cheaper than a new policy. Additionally, when you already have a health insurance policy, you should not buy a top-up plan which has a deductible higher than the existing plan’s coverage. So if you have a health insurance policy with a cover of Rs. 2 lakhs, then do not buy a top-up plan with a deductible higher than Rs. 2 lakhs. It does not make sense to opt for top-up plans with high deductibles or if you already have an existing policy with a very high cover.
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