How top-up health insurance policy can help you pay less premium for higher coverage – Explained

A top-up health insurance policy is like a supplemental health insurance plan that helps you enhance the coverage level while at the same time keeping the premium affordable. According to Dhirendra Mahyavanshi, Co-Founder, Turtlemint (An InsurTech Company), there are two components of the top-up policy that you need to understand.

“The top-up health plans come with a sum insured and a deductible limit. When the claims exceed the deductible limit, the excess claim is paid by the insurance company,” Mahyavanshi told FE Online.

For example, say you buy a top-up plan with a sum insured of Rs 5 lakhs and a deductible of Rs 2 lakhs. Now, if the claim exceeds Rs 2 lakhs, the excess claim would be covered by the top-up policy.

According to the Turtlemint co-funder, the top-up policy works best in a combination with an existing health insurance plan. You can buy a top-up policy with the deductible coinciding with the sum insured of the base policy. In such a case, claims up to the deductible would be met by the base health insurance plan while excess claims would be met by the top-up plan.

Types of top-up policy

A top-up health policy comes in two variants: top-up and super top-up.

Under the top-up plan, each claim is tallied with the deductible limit. If the claim exceeds the deductible, the excess is paid.

In the case of super top-up plans, the aggregate claims incurred in a year are tallied against the deductible. If the aggregate claims exceed the deductible, the excess is paid.

How to buy the best top-up plan

Mahyavanshi shared some tips to buy the best top-up policy:

  • Match the deductible with the sum insured of the existing health plan
  • Opt for an optimal coverage
  • Check the coverage benefits to ensure the coverage is inclusive
  • Check the pre-existing waiting period and opt for a plan which has a low period for quick coverage
  • Check the coverage limits and sub-limits and opt for plans which do not restrict the coverage considerably
  • Check the networked hospital list and opt for a plan which has the widest network of hospitals
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How much can you save by buying a top-up policy?

The Turtlemint co-founder said that a top-up policy is recommended when you want to increase your health insurance coverage but do not want to pay a high premium. The policy is very cost-effective and helps you save on the premium cost.

For example: Say, a 35-year-old man has an existing plan of Rs 5 lakhs with a premium ranging between Rs 6000 and Rs 8000. If he wants to enhance the coverage to Rs 10 lakhs, he has two options:

Case 1 – He can increase his coverage on renewal with the same insurer or a different one. Approximately, the premium for Rs 10 lakhs of indemnity coverage would cost between Rs 10, 000 to Rs 12, 000.

So, his incremental cost = Rs 4000 approx for the additional Rs 5 lakhs coverage.

Case 2 – He can opt for a super top-up plan of Rs 5 lakhs and a deductible of Rs 5 lakhs as his existing plan is Rs 5 lakhs. The premium for the super top-up policy would range between Rs 1000 -2000 per annum.

His premium outlay would be in the range of Rs 6000-8000 (for his existing plan) + Rs 1000-2000 (for the super top-up plan).

So, his incremental cost = Rs 1000-2000 approx. for the additional 5 lakhs coverage.

Thus, the top-up plan can help you in saving your aggregate premium outgo. It is recommended by insurance advisors for enhancing the coverage if you have a base health policy.

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