Everyone realises the importance of having a health insurance, but many struggle with its cost. A health insurance top-up plan strikes a balance between having adequate cover and affordable cost. But you need to keep in mind that top-up plans may not be cashless. So, you may have to pay out of your pocket first and then submit the bills for reimbursement. 

We explain why, but first understand what a top-up policy is.

Top-up plan

A top-up is a regular health policy that pays for hospitalisation, but it comes with a deductible. A deductible is that portion of the claim amount that is not covered by the insurer and has to be paid before the benefits of the policy kick in. You can pay the deductible yourself or from a health plan that doesn’t have a deductible.

Let's say you have a health insurance policy of Rs5 lakh and a top-up cover of Rs10 lakh that comes with a deductible of Rs5 lakh, and the hospital bill is below Rs5 lakh. Here, you can simply use your base policy. But if the bill is, say, Rs7 lakh, you can use the base cover to pay Rs5 lakh and the top-up to pay the remaining Rs2 lakh.

The deductible feature of a top-up plan makes it cheaper as it reduces the liability of the insurer. The higher the deductible, the cheaper is the cover. 

For example, a 30-year-old male will pay around Rs10,000 for a sum insured of Rs10 lakh, but if he buys a base plan of Rs3 lakh and buys a top-up plan of Rs10 lakh with a deductible of Rs3 lakh, the total cost will be about Rs7,500. Opt for a top-up policy that looks at aggregate claim and puts together many cases of hospitalisation to calculate the deductible and not just a single incident in a policy year.

Is it cashless?

Top-up plans are typically reimbursement policies as they are usually used along with a base policy, and when you use both the policies, you end up applying to two insurers and multiple cashless settlement becomes difficult. 

You could ask your hospital for a duplicate copy of all the documents or ask your insurer—to whom you have applied for cashless claim—for a settlement summary; if needed, the insurer could also provide the original documents stamped by it. All these documents need to be submitted to the insurer providing the top-up policy to settle the reimbursement claim. The entire process could take about a month. Some hospitals may help you get a cashless claim from both the policies. Having both policies from the same insurer can also help get cashless settlement for both. So do check with the insurance desk. 

Top-up plans work as a good option to increase your cover, but they work best for bigger eventualities; it’s still important to buy a decent base cover.

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