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Tata Capital > Blog > Wealth Services > Are Top-Up Plans In Health Insurance Worth Buying?

Wealth Services

Are Top-Up Plans In Health Insurance Worth Buying?

Are Top-Up Plans In Health Insurance Worth Buying?

What is your yardstick for purchasing health insurance? How do you decide your health care cover amount? For many of us, zeroing in on a health care insurance amount is based on hunches. But, this can be a dangerous trend, considering the soaring cost of medical treatments.

A recent PWC report pegs a 6.5% increase in medical costs in 2022 alone. And, this is not even the year of the pandemic!

When you hear such a figure, you may realise that your present health insurance is off by a few lakhs. This can translate to your health insurance falling short on covering hefty hospital bills. Fortunately, there is a way out, for which you don't even need to buy another health insurance. You can simply opt for a top-up health insurance plan.

What is a Top-Up Health Insurance Plan?

A top-up health insurance plan is to you what a stepney is to a vehicle. A car runs smoothly until there is a puncture, which is when stepney comes into play. Similarly, your medical treatment goes smoothly until your insurance policy doesn't run out of its threshold. But, when it does, your stepney or top-up insurance money kicks in to let you continue your treatment hassle-free.

Simply put, a top-up health insurance plan provides additional medical coverage when you or your family exhaust your base health insurance amount. Bought on top of your base health insurance policy, it seamlessly kicks in when your health insurance plan runs out of money in a particular year.

For Eg. Suppose Mr.Shah has opted for a health insurance plan with a sum insured of Rs. 5 lakhs and enhanced the existing plan with a top-up insurance plan of Rs. 10 lakhs. Thus, the total sum insured amount is Rs. 15 lakhs with a set threshold limit of Rs. 5 lakhs.

If his medical bill is Rs. 8 lakhs, the insurer will pay Rs. 5 lakhs from his base plan and Rs. 3 from his top-up plan

Note: The top-up plans work on a per claim basis. Hence, the deductible rule will apply for each claim and not the total medical expenses incurred during the policy year. Meaning, only if the claim amount exceeds the deductible limit, the top-up plan will be active. 

Are Top-Up Plans in Health Insurance Worth Buying?

The simple answer is a resounding yes! When you opt for a top-up health plan, you get more coverage for less money. Here are a few reasons why you should opt for top-ups on health insurance.

Top-Up Health Insurance is Cost-Effective

The pricing policies governing top-up covers are more cost-effective than the ones on base policies. Simply put, buying a top-up plan is cheaper than increasing your base cover amount.

Say, you have a health insurance policy of Rs 3 lakh for which you are paying a premium amount of Rs 6,000 every year. But, you feel that the coverage amount is not enough and you should have at least Rs 5 lakh as the coverage amount. Now, if you decide to increase the coverage of your existing plan from Rs 3 lakh to Rs 5 lakh, the premium amount for the policy would be Rs 10,000 annually. 

Meanwhile, in case you already have a health insurance policy, then the premium amount for top-up plans is usually Rs 1,000 per lakh cover. Hence, for an extra Rs 2 lakh cover, you will have to pay an additional premium of Rs 2,000. The total premium for the policy and the top-up plan combined would be Rs 8,000 per year.

Reduces Financial Burden

It can be stressful, especially for the person who is unwell, to make alternative financial arrangements simply because they may run out of insurance money. With a top-up plan, you always have greater peace of mind, knowing that any minute, the top-up amount will kick in.

Covers a Myriad of Costs

The top-Up health insurance plan has very few strings attached, which is why they cover a diverse range of costs like:

  • Pre and post-hospitalisation expenses
  • Surgeries and procedures
  • Hospitalisation costs
  • Annual health checks
  • In-patient expenses
  • Day-care procedures

A top-up cover extends the same comprehensive benefits as your base plan.

Easy Renewal and Eligibility

Most top-up plans come with lifelong renewability, so you never have to worry about losing additional cover on your base plan. Also, applying for a top-up plan takes minutes and can be done online. Moreover, you don't require any pre-medical screening until a certain age. This is why, opting for a top-up cover earlier in life makes a tonne of sense.

Over to You

Sure, top-up health insurance plans are an excellent way to provide yourself and your family members robust medical support. But choosing one that suits your needs can often be challenging. This is where you need reliable guidance, which we at Tata Capital Wealth can provide.

Through our web portal, you can seek insurance and other investment-related guidance and let our reps approach you with top-notch bespoke solutions.

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