Health insurance is a necessity given the rising cost of medical treatment. The health insurance market is growing at a fast pace but there is still a lot of confusion among buyers. For example, only 80 per cent health plans sold in the market are base plans, in spite of the fact that there are multiple options for increasing the cover without paying a lot of money - top-up and super top-up policies being one of them.
What Are Top-Up Plans
Top-up plans are add-ons to a basic cover which one can use when the base cover is not enough. These cover expenses above the base policy's sum insured. The top-up kicks in only after a certain limit - called deductible - is crossed. But remember that top-up plans consider every hospitalisation as a separate claim and apply deductibles separately. For example, if one has a top-up plan with a deductible of `2 lakh and cover for `4 lakh, the top-up option will be triggered only when a claim is above `2 lakh. If there are two medical bills of `1 lakh each, it will not be triggered. "A top-up health plan is a regular indemnity policy but far cheaper than the basic policy," says Sandeep Patel, CEO & MD, Cigna TTK Health Insurance.
The deductible is the amount not covered by the insurer and which the policyholder has to pay before the top-up option is triggered. The limit is chosen by the policyholder at the time of buying the policy. Bills below this limit are paid by policyholders either through their basic policies or from own pocket.
Difference between top-up and super top-up
Just like top-up plans, super top-up plans are an addition to basic health plans which cover medical expenses above the sum insured of the base medical policy. These are the improvised version of top-up policies where the threshold limit applies to total expenses incurred during the policy period irrespective of the number of claims. "Super top-up plans take care of excess hospitalisation expenses that may arise due to the amount paid for any illness over and above the deductible amount," says Sanjay Datta, Chief, Underwriting, Claims and Reinsurance, ICICI Lombard. They mostly come to the rescue when a single claim does not cross the threshold limit of the regular policy. The super top-up option is triggered when the aggregate of all claims in the policy period exceeds the deductible limit chosen by the policyholder. Super top-up plans also provide additional features like coverage of pre- & post-hospitalisation expenses, day care procedures and domiciliary treatment, just like basic insurance plans, which top-up plans don't cover. A medical check-up for super top-up is needed only if one takes it after the age of 55 till the age of 65.
"The advantage of a super top-up plan is the deductible limit, which gets applied cumulatively considering all the claims put together in that particular policy year," says Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance.
The per claim basis top-up plans are not very helpful in case of critical illnesses such as cancer, whereas super top-up plans cover amounts in excess of the total sum insured incurred under multiple claims during the policy period till the policy limit. Also, the super top-up plan covers most in-patient hospitalisation expenses due to illness or injury. Besides, for some pre-existing diseases or medical conditions, waiting periods are applicable. The coverage offered in the plan is mentioned in fine print; it is advisable for the policyholder to understand the policy before buying it. "Do not forget to check the deductible criteria (top-up or super top-up), waiting period for pre-existing diseases, limits inclusive of donor expenses, pre- and post-hospitalisation expenses and any co-pay applicable" says Patel.
Need for super top-up policy
Super top-up is needed in cases where a policyholders base cover or self- financing is limited. "People can opt for a super top-up even without a basic health policy in order to meet sudden medical expenses that may go above the amount that he or she can shell out from own pocket," says Sasikumar Adidamu, Chief Technical Officer, Non Motor, Bajaj Allianz General Insurance.
Also, these are good options in case one only has the employer-provided cover, where the sum insured is limited. People who are about to enter the senior citizen category with limited sum assured can also opt for super top-up plans with more coverage to get higher protection. "People in the age band of 40-plus should look at these covers to increase the overall coverage due to high risk of serious ailments in this age bracket," says Puneet Sahni, Head, Product Development, SBI General Insurance.
Policy Pricing
The premium for top-up/super top-up plans is lower than the premium for a basic health plan with similar features as these are supplementary policies that offer benefits of high sum insured at a low price. "Super top-up health plans are meant to bridge the gap between existing policies and actual medical costs," says Patel.
Pricing depends on the benefits offered. "In case of super top-up plans, the probability of triggering the cover is higher compared to top-up plans and, hence, the premium is adjusted accordingly due to aggregate deductible," says Sahni. People can always opt for a basic sum insured plan plus a super top-up policy, which is a better option to save cost, instead of buying an additional higher sum insured product.
"Medical inflation has seen significant rise in the last 10 years and will continue to grow at a skyrocketing rate. Super top-up plans are designed keeping in mind the high medical inflation rate; these are perfect for increasing your cover at a nominal cost," says Dhruv Sarin, Head of Health Insurance, Policybazaar.com.