How about a ‘top up’ health insurance?

With healthcare costs in India increasing at an exorbitant rate every year, it becomes mandatory to have a health insurance policy. However, most people usually take a health cover of approximately Rs 3-4 lakh for the family. Since this amount covers the entire family, this can fall short of your actual expenditure. Multiple ailments of family members, or even if a single member has to undergo hospitalisation many times can force you to dig into your savings to meet the expenses. This is where top-up health insurance plans can be used.

A top-up health insurance policy is an additional health insurance which provides coverage over an existing health insurance. This means in addition to a basic mediclaim policy, you can purchase a top-up cover, which will give you coverage over and above what is available in your original policy. This usually works out to be cheaper than if you enhance limit of the same policy or purchase a new health insurance policy. The top-up policy works like any other health insurance policy and has the same benefits of reimbursing hospitalisation expenses, any medical expenses, etc.

What's top up?

The main difference between a top-up cover and a regular health insurance policy is that top-up plans can be used only in case expenses incurred are beyond a certain limit. This limit, known as the deductible is decided beforehand and premiums are calculated accordingly. A top-up plan with a higher deductible has a lower premium attached to it.

Another criterion is that a top-up plan normally works only on a single incidence of hospitalisation. This means that you can use the top-up plan only if your medical bills exceed the deducible during a single hospitalisation by a single member.

How it works

Let us assume you have an existing health insurance policy with your employer which covers you and your family to the extent of Rs 3 lakh. If your wife is hospitalised during the year and expenses amount to Rs 4 lakhs, then you must bring in Rs 1 lakh from your savings, if you do not have a top-up cover.

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