Home / Money / Personal Finance /  Can a top-up plan for pre-existing health issues help?

I have a floater health policy of 5 lakh and I have been renewing it for the last four years. I have some health issues and would like to know if I can take a top-up plan any time or only be able to increase the sum insured only on the renewal of my policy. Also, if I buy a top-up plan, can I use it for pre-existing medical conditions along with my regular policy?

—Name withheld on request

 

A top-up plan works independent of the base plan. It need not be concurrent with the base plan renewal date. So, you can buy a top-up plan anytime.

Whenever you enhance your sum assured or buy a new plan, waiting period on the new sum assured is applicable from the date of purchase. Generally, top-up plans have a waiting period for pre-existing diseases of between 2 to 4 years. So, if you buy a top-up plan today, you would be able to make a claim for pre-existing ailments only after this waiting period for pre-existing diseases is over. Do make sure that you accurately disclose your health condition while buying the top-up.

 

My car is five years old and I have never made any claims on the car insurance in these five years. However, I have noticed that every year, the premium on the policy increases slightly. I have been buying the policy from the same insurer all these years but the premium continues to rise despite this. Do let me know the reason for this.

—Name withheld on request

 

Car insurance premium is a function of two sections i.e., own damage and third-party premium. You should assess the change in premium in both sections separately. The own damage section provides coverage for loss to your car in case of an accident or theft. The third-party section provides coverage for any legal liability on you due to personal or property loss caused to someone else by your car’s accident e.g., death or injury of a pedestrian. 

By law, third party liability is mandatory to buy. The premium is fixed across a category of vehicles, and is not dependents on an individual’s claim history. Over the last few years, the third-party premium has been on the rise. Own damage premium is dependent on the Insured Declared Value (IDV) of the car, no-claim bonus (NCB) and the discount offered by the insurer. 

First, IDV is the sum assured of the own damage section. Lower the IDV, lower would be the premium. Each year, the IDV of the car comes down due to depreciation. The second factor is the NCB. Since you have not made any claim, your no-claim bonus would be increasing or remain intact each year. This keeps your premium either constant or brings it lower. Finally, the discount offered by the insurer changes every year. This discount is applied on the standard tariff charges. 

Insurers offer lower discount on older cars. However, given the other two factors, your premium should not be increasing every year in this section. If this is so, you should evaluate other insurers, who could offer better discounts and help lower your premium.

Abhishek Bondia is principal officer and managing director, SecureNow.in.

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