Health Top-Up Plan a Cost-Effective Way to Increase Cover

There are many features and add-ons that can be clubbed with your regular health insurance policy. Medical costs are increasing by the day, and many find that a regular vanilla health insurance policy remains inadequate in some cases.For example, if a person has a health plan with a coverage of Rs. 5 lakhs, this may seem like it is enough for most treatments. But if in unfortunate circumstances that person is diagnosed with a major illness like cancer, the treatment costs are likely to exceed the coverage amount. In that case, the policyholder will have to shell out the balance amount from their own pocket, leading to financial woes.To overcome this hurdle, insurance providers have come up with the concept of a Top-Up Plan. A top-up health plan adds a further amount of coverage to your existing basic policy for affordable premiums. For example, if you have a basic plan of Rs 5 lakh coverage, you can opt for an additional 5 lakh coverage via a top-up plan.

A top up plan provides added health coverage over and above your existing coverage. Suppose you have a health plan that has coverage worth Rs. 5 lakh. Now in case your medical bills amount to Rs. 6.5 lakh, you will have to pay the balance Rs. 1.5 lakh from your own pocket.But if you had topped up your existing insurance for an additional Rs. 5 lakh, then the balance of Rs. 1.5 lakh could have been paid using the top up plan. Thus, not requiring you to pay from your own pocket and keep your savings intact.

The question often rises, what if instead of a top up plan, I get two health insurance policies? That would also double the coverage, right? That may be correct, but one important factor to consider is the premium amount. For two health plans, you will have to pay twice the premiums. However, if you opt for a top-up plan, your extra premium will be considerably lower due to the concept of deductibles.

A deductible amount is a minimum amount in a health insurance policy that you have to pay out of your own pocket. Your medical expenses above that amount will be paid by your insurer. In regular insurance, the deductible amount is quite low, thus making the premiums high. However, a top-up plan has a deductible that is high, usually equal to or less than the base policy coverage.Because the top-up plan will only kick in if and only if your claim amount goes above the deductible amount, insurers can keep the premiums for top-up plans low, making it a cost-effective way to increase cover.

Thus, a top-up plan can do wonders for you if you feel that your base insurance policy coverage may be inadequate. Instead of getting multiple policies and paying high premiums, you can ask your insurer to top up your existing policy with more coverage so that you have a cushion to fall back on in circumstances where you may incur heavy medical costs.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.