Explained: What is top-up health insurance and how should you use it?

A top-up plan is a regular health insurance policy that covers hospitalisation costs but only after a threshold limit, known as deductible, is crossed. A deductible is that portion of the claim amount that is not covered by the insurer and has to be paid by the policyholder before the benefits of the top-up policy can kick in.

The deductible feature of a top-up plan makes it cheaper because it reduces the liability of the insurance company.

A top-up plan, therefore, is a cost-effective way to increase your health insurance cover. You can take a base policy and a top-up over and above that policy. This way you can use your base health insurance policy to make a claim up till the deductible amount and use your top-up plan for any payments over that.

But ensure the deductible is not more than the sum insured you have taken in the base policy. So, suppose you have a health insurance policy with a sum insured of ₹ 3 lakh, make sure the deductible in your top-up plan is not more than ₹ 3 lakh.

This way if there is a claim of say more than ₹ 3 lakh, you can use both your base policy and top-up plan to pay your bills.