Top-up policies are medical reimbursement policies with high deductibles. Put
simply, these policies pay for expenses over and above a certain threshold. For
example, say, over Rs 3 lakh could be the cover offered by your company.
Suppose an individual meets with an accident and the treatment costs him Rs 5
lakh. He has a health cover of Rs 3 lakh from his employer and an additional Rs
10 lakh top-up policy with deductible of Rs 3 lakh.
In such circumstances, Rs 3 lakh will be paid by
the policy bought by the employer and the remaining Rs 2 lakh will be paid by
the top-up policy. The top-up policy will pay for expenses up to Rs 13 lakh if
the sum assured is 10 lakh with a deductible of Rs 3 lakh. If the top-up buyer
does not have any other cover, s/he has to bear Rs 3 lakh of medical expenses
Top-up covers are cheaper than full-fledged covers and come in handy should the
policyholder exhaust the existing/group policy's sum insured. "The premiums on
such policies are lower than buying another standard hospitalisation policy by
nearly 40%," says Renuka Kanvinde, senior manager - health administration
services, Bajaj Allianz General Insurance Company.
DOES IT MAKE SENSE?
Buying a top-up plan makes sense in two
situations. One, you already have a health cover for a small amount of, say, Rs
1 lakh, but want to increase the quantum of cover.
"The sum assured would have been adequate back then. But now an individual
should look at a sum assured of Rs 3-5 lakh, especially in the metro cities on
the back of rising healthcare expenses," says Antony Jacob CEO, Apollo Munich
Health Insurance. "Back then, policyholders did not have too many options. But
now an individual has the choice to opt for a top-up and bridge the shortfall,"
The second scenario is also linked to the quantum of cover, but from your
employer. Some companies link the sum assured to the seniority of the employee.
This means if you are at a lower designation, your cover also will be lower.
"Such low value policies can again be topped up with marginal covers to meet out
of pocket expenses in case of hospitalisation," says Jacob.
However, please note that it is always better to buy an individual health
policy. "In case of a job change, such employee covers cease to exist. Hence, it
is best to have at least a low value cover of Rs 1-2 lakh and top it up with a
sizeable cover," says Niraj Jain, CEO & Principal Officer at
According to experts, a
top-up plan is always better than buying multiple health plan to increase the
cover. "Holding multiple health insurance policies can be taxing for an
individual, especially at the time of claim settlement. If the first insurance
company does not return the original documents and bills on time, you may be
denied of the claim settlements from other companies because of the submission
clause with a stipulated period of time," says Jain.
You can also buy a top-up plan for your entire family using the family floater
option. You can buy cover up to Rs 15 lakh, of course then the deductible goes
up to Rs 5 lakh. A point to note is that the top-up policy applies the
'deductible' criteria to each claim and not all claims put together in one year.
For a three-member family, with the senior most member aged 40, the premium for
a top-up policy with sum assured of 10 lakh and a deductible of Rs 3 lakh works
out to 4,436 per year.
Sure, these plans are perfect for middle aged and senior citizens who otherwise
have to pay an exorbitant sum to buy a fresh policy. But these top-ups also have
a drawback. "The downside is when there are many claims in a year and all are
below the base policy limit, the policy may not be useful," says Mukund Seshadri,
Certified Financial Planner and founder partner, MS Ventures.
"Despite this, these policies are worthwhile to buy, especially for people in
higher age groups, where a normal mediclaim could be expensive," he says.
Economic Times, India, dated