How to ‘top-up’ your health cover?

How to ‘top-up’ your health cover?

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Standard health covers most people purchase range between Rs 1 lakh and Rs 3 lakh. While this amount may be sufficient for minor hospitalisation or surgery, if something serious happens, you would be left helpless. A massive heart attack can cost up to Rs 5 lakh, and if you meet with a serious accident, it can cost you a fortune. Therefore, as healthcare costs keep rising, you should review if your insurance cover is sufficient or needs a ‘top-up’.

Top-up plans

Health Insurance top-up plans, often called health booster plans are conventional indemnity plans that come into effect and cover hospitalisation costs when you cross the threshold limit of your health insurance policy. This limit is called deductible in insurance terminology. A deductible is nothing but the portion of the claim amount that is not covered by the insurer and must be borne by the insured before the benefits of the policy come into effect.

Top-up plans start with a basic deductible of Rs 1 lakh and can range anywhere between 1 lakh to Rs 5 lakh. A deductible of Rs 1 lakh would mean that the insured person needs to bear the first 1 lakh of the hospitalisation bill and only after that, the insurance company will pay the balance. These top-up plans are economical due to the deductible as the insurance company does not have to bear minor hospitalisation claims which are more likely to be frequent or highly probable.

Top-up plans come in the form of individual plans as well as floater plans. A floater plan covers more than one person and considers them as one unit. If one family member claims, the sum assured is reduced for the rest of the family by that much for the year.


Top-up plans also have some limitations. You may find that most top-up medical insurance plans do not cover pre-hospitalization and post-hospitalisation expenses. Also, top-up health plans cover only single incidence of hospitalisation. It means that only under the circumstance when your hospital bill exceeds the deductible amount during a single incident of hospitalisation, will your top-up plan come into action. To understand this better, let’s share an example. A person gets hospitalised and needs to bear Rs 6 lakh. A top-up plan with a deductible of Rs 3 lakh shall cover the difference of Rs 3 lakh, but if he gets hospitalised twice in a year and needs to cough up 2.5 lakh each time, the top-up plan will not help him at all. It happens because individually, both the hospital bills are well within the deductible limit.

Why do top-up plans make sense?

A top-up on your health insurance plan makes much sense if your base is comfortable. While getting a top-up health insurance policy, you need to keep in mind the deductible amount that must be trumped during a single hospitalisation, for the top-up plan to come into effect. Hence, you should have a standard health cover that takes care of you and your family’s minor health needs and a top-up plan to extend that cover.

You also need to understand that the higher the deductible, the more cost-effective the top-up plan is going to be. If your basic health cover is decent, you can afford a high deductible top-up plan. For example, if a plan has Rs 2 lakh deductible, and a top-up cover of Rs 5 lakh, a 35-year-old insured person has to pay about Rs 5000 as premium. If you increase the deductible to Rs 4 lakh and the top-up cover to Rs 10 lakh, the premium shall come down to about Rs 2500.

You need to understand that top-up medical insurance premiums depend on how close you are to deductible limit. It is easy to comprehend that minor claims landing between Rs 2 lakh and Rs 3 lakh are far more frequent than large claims that are above Rs 4 lakh. Hence, a top-up plan with a high deductible will always be more economical than a top-up health insurance plan with a lower deductible.