Did You Know | A top-up health policy can be cheaper than buying additional health cover

Did You Know | A top-up health policy can be cheaper than buying additional health cover

If you want to increase the amount of health cover you have, a cheaper way is to top up your existing health plan rather than buying a new policy.

What are top-up plans?

A top-up health insurance plan, also called add-on plan, is a regular indemnity plan that covers hospitalization costs. However, unlike a regular hospitalization policy that does not have a deductible, top-up policies come with a huge deductible.

You can use your individual health insurance policy or group policy provided by your employer to cover the initial expenses. In fact, the rationale behind top-up health insurance policies is to enable you to increase your existing health cover at an affordable cost.

How are they better than stand-alone policies?

Because of a huge deductible, they are cheap. To illustrate, Bajaj Allianz General insurance Co. Ltd offers Extra Care, a top-up health insurance policy. For a sum insured of 10 lakh and a deductible of 3 lakh the policy charges 2,500 from a 30-year-old. But for Health Guard, a basic indemnity policy from the same insurer, the premium will be 10,913 for a sum assured of 10 lakh for a 30-year-old.

The primary reason why top-up plans charge less is the deductible clause. Unlike a regular health insurance policy which can be invoked at all times in case of hospitalization, top-up policies get triggered only if the expenses overshoot the deductible limit. This usually happens in case of a serious accident or an ailment requiring expensive treatment.

Watch out for

These are top-up policies and must be invoked only when the cover on your existing policy in not sufficient and the expenses have crossed the deductible limit. For this reason you need to ensure that these policies are taken strictly over and above your basic policy and that the basic policy has a sum insured which can cover the deductible limit.