(iStock)
(iStock)

Adding a top-up health plan can benefit you

  •  If you have a basic health plan that covers the deductible amount, any payments over that can be covered through a top-up plan
  • Make sure you take adequate cover, as one incidence of hospitalisation can expose the entire family

Health insurance is important because, perhaps, it is the only efficient tool to battle the rising cost of medical care.

There are more than 25 non-life companies that offer health insurance products.

Your first policy is an indemnity product that pays for hospitalisation expenses, but before buying it, you should consider some options to make sure you are able to keep your costs down while ensuring proper cover. We tell you how you can make use of a floater policy and top-up plans to your advantage.

For an individual

Going by the basic health cover launched by the government for the underprivileged, a minimum sum insured or insurance cover of 5 lakh is essential. But if you live in a bigger city, you will need to bump up your cover and a top-up plan can do that effectively. A top-up is an indemnity policy that pays for hospitalisation, but only after a certain threshold or a deductible limit. A deductible is the portion your top-up plan will not pay for. So if you have a basic health plan that covers the deductible amount, any payments over that can be covered through a top-up plan. This is a cost-efficient way to increase your health cover.

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. But make sure you opt for an aggregate top-up plan that calculates the deductible amount from multiple cases of claims.

For a family

If you have a family and are in the market to buy health insurance, you could consider buying a floater policy, which covers the entire family under a single policy and, therefore, is a much cheaper alternative compared to buying individual plans for each member. But keep in mind that a floater considers the entire family as one unit; so if one member makes a claim, the overall cover reduces by that much for the entire family in a policy year. So to benefit from a floater plan, you need to ensure a few things. First, make sure you take adequate cover, as one incidence of hospitalisation can expose the entire family. Second, floaters work best when the family is young or the age gap between the spouses is not much. If a member is very old or not in good health, including this person in the floater may not make sense.

You can also take a top-up floater plan that covers the entire family after a basic deductible is crossed, but do take the aggregate plan.

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