Add a layer of financial security with top-up and super top-up policies

A top-up plan kicks in once the user has exhausted the sum insured on their base health insurance policy

Hyderabad: Health expenses are difficult to bear unless there is a sizable insurance cover. However, there might be times when a health cover does not cover all the expenses. In such scenarios, top-up and super top-up policies come handy. These policies come at a lower cost yet offer a sizable cover once the limit on the base policy is reached.

A top-up plan kicks in once the user has exhausted the sum insured on their base health insurance policy. For example, if a policyholder has a base policy of Rs 5 lakh and a top-up of Rs 10 lakh, the total sum insured will be Rs 15 lakh. If the policyholder gets hospitalised and the bill,say, comes up to Rs 7 lakh, then the insurer will pay Rs 5 lakh from their base plan and Rs 2 lakh from the top-up plan, explained Dr Sudha Reddy, Head– Health and Travel at Digit Insurance.

Top-up plans get triggered on a per-claim basis. It means the deductible (payment from the base policy) will apply for every claim made during the policy year. Super top-ups are like top-up plans but work slightly differently. While top-ups work on a per-claim basis, super top-ups kick-in when the total claims in the policy year are above the threshold limit. These plans work at an aggregate level instead of a claim level.

For example, if a policyholder has a base policy of Rs 5 lakh and a super top-up of Rs 10 lakh, the total sum insured will be Rs 15 lakh. Assume that multiple claims of Rs 7 lakh, Rs 3 lakh, and Rs 1 lakh are made during the policy year. The base plan will cover up to Rs 5 lakh for the first claim of Rs 7 lakh and the remaining Rs 2 lakh will be paid through a top-up plan. For other claims during the policy year, the insured will have to bear the expenses out of their own pocket. However, if the insured has a super top up, then the other two bills of Rs 3 lakh and Rs 1 lakh too will be taken care of by the insurer since the threshold of Rs 5 lakh was reached in the first claim itself during the same policy year, she explained.

Beyond the deductible, top-ups and super top-ups work like any other standard health insurance product. These plans don’t cover pre-existing diseases until the waiting period is completed. The same applies to specific illnesses as well. Infertility treatment, voluntary cosmetic surgeries, self-inflicted injury is not covered. Policyholders cannot make a claim until they have exhausted the deductible (base policy).

Health insurance is a prudent form of financial planning. Both top-up and super top-up plans help in managing medical expenses. A super top-up plan is applicable when total expenses during the policy year go above and beyond the deductible. Also, top-up plans are applicable to a single claim whereas super top-ups are applicable for multiple claims made in a year. Therefore, from a financial planning perspective, it is prudent to buy a super top-up plan, she explained.