Health care is expensive and the cost of health services is increasing by the day. That is why treatment for an illness or a stint in the hospital can actually overshoot the sum insured promised by your health care policy. This is when a top-up insurance policy can come in handy.
What is a top-up policy in health insurance?
A top-up insurance policy is simply an add on to your regular health care scheme. You will need it when you utilize the cover that your policy gives you, but still need more coverage to continue or complete your treatment. A top-up scheme allows you to increase the threshold limit. In the event of an illness, if your hospital bills exceed the threshold limit, then the top-up plan will be activated. That is why you have to carefully choose the threshold amount, keeping in mind, the sum assured of your regular health insurance policy.
A particular characteristic of the top-up policy is that it provides a single incident cover. That means it will pay the amount by which your hospital bill overshoots the sum insured of your health insurance policy for just one illness, and then it will become invalid.
A few things you need to know about a top-up insurance policy-
- You can make a claim on both your health insurance policy and the top-up plan at the same time (but only for a single incident).
- You can purchase the two plans from two different insurance providers. At the time of hospitalization, each insurer will pay up separately.
Are top-up plans profitable?
If you want to increase the amount that your health policy pays, then a top-up plan is a sensible option instead of purchasing another medical policy. If you go with a higher threshold level and higher deductibles, then this add-on is quite cheap.
Explanation of how top-up insurance policy works
Suppose you have a health insurance policy worth INR 5 Lakhs and you bought a top-up insurance policy of INR 10 Lakhs with a threshold limit of INR 5 Lakhs.
- If you run up a bill of any amount less than or equal to INR 5 Lakh, your health insurance policy will pay it.
- Suppose your bill is worth INR 9 Lakh, then your health policy will pay INR 5 Lakh. Since the threshold level of your top-up scheme was INR 5 Lakh, that too will become operational and cover the remaining INR 4 Lakhs.
If you get two hospital bills, say for INR 4 Lakhs each, then your top-up plan cannot help you as each bill is below the threshold limit.
To make your health care plan truly reliable and ensure that you are not deprived of quality treatment because of a cash-crunch, consider getting a top-up insurance policy.