A top-up health insurance plan is defined as a policy that offers coverage for costs of hospitalization only after a certain threshold is crossed. This is known as a deductible.
A deductible is the part of the claim that is not covered by the insurance company and must be paid by the policyholder in order to avail of the benefits of the top-up policy. This feature of a top-up plan makes it most cost-effective, as it minimizes the liability of the insurance provider.
Thus, a top-up plan is an affordable way to increase the cover you receive in your health insurance plan.
Is it necessary?
This type of plan enables you to use your base mediclaim policy for family to claim up to the deductible amount. Therefore, you can use your top-up plan to make any payments over and above that. However, you must make sure that your deductible is not more than the sum insured. Thus, if your family health insurance plan has a sum insured of INR 5 lakh, ensure that the deductible in the top-up plan does not exceed INR 5 lakh. Thus, for example, if there is a claim of more than INR 5 lakh, you may utilize both the base policy and the top-up pan to pay your hospitalization costs.
Top-up plans are not necessary; however, they can be beneficial, as mentioned above. Top-up policies are eligible for income tax benefit for the premium as per Section 80D of the Income Tax Act, 1961. Additionally, many insurance providers prescribe medical tests only for those individuals who are over the age of 45 years.
Many times, the costs that are estimated when buying health insurance may increase drastically over time while the cover does not change. In such a case, instead of enhancing your existing cover, you can purchase a top-up policy instead. This can act as an add-on cover.
When to buy it
A top-up plan makes sense when you wish to increase the cover without paying too much. Thus, with rising medical costs, instead of purchasing a separate health policy, you can simply purchase a top-up plan. This will be less expensive than shelling out a high premium.
Advantages and disadvantages
You can purchase a top-up plan even if you do not have basic a medical policy. There are also almost no restrictions or sub-limits applicable to hospitalization expenses. A family discount may also apply to some plans. Additionally, life-long renewability may be an option.
There are no clear disadvantages to purchasing a top-up plan. Such a plan can only help cover your and your family’s needs better.
Based on the aforementioned benefits of the top-up plan, you should certainly consider investing in one to help meet the ever-increasing medical costs.
