Health Insurance policies are effective in ensuring that you are financially covered in the event when you are faced by a medical emergency? However in current times when medical costs are growing a medical insurance plan alone may not be sufficient and a back-up plan may also be required. Consider the following example before we discuss this further:
Mr. Mehta had taken a health insurance policy a few years back, the insurance amount for his policy was Rs. 3 lakhs. He was diagnosed with coronary illness and had a heart procedure done which cost him Rs. 5 lakhs. However his policy covered an amount of only Rs. 3 lakhs so the rest of the amount (which was Rs. 2 lakhs) had to be paid from his own pocket.
So what if there was an option that helped in such a situation as a backup plan? Well there is, in the form of Top Up Plans and Super Top Up Plans.
Top Up Plan and Super Top Up Plan Explained:
A top up plan offers additional coverage to the insured who already have an existing medical insurance plan without the need to buy an additional policy. This plan covers expenditure that may arise out of a single illness; this is over and above the existing base cover.
A super top plan offers medical cover when a single claim does not go beyond the threshold limit of the insurance cover but multiple claims do. A super top plan would consider the total of all bills that are submitted, regardless whether they are for a single illness or multiple ones.
Difference Between Top Up and Super Top Up Plan:
Both the plans may seem similar as they offer assistance in case the medical expenditure exceeds the base amount covered by the insurance policy. So let us understand the difference with the help of an example.
Considering Mr. Mehta’s example; let’s assume Mr. Mehta had a base plan of Rs. 3 lakhs and a top up plan of Rs. 6 lakhs, the deductible being Rs. 3 lakhs. So for Mr. Mehta’s hospitalization bill of Rs. 5 lakhs the basic insurance will cover Rs. 3 lakhs, rest of the amount which is Rs. 2 lakh will be covered by the top up plan.
However what happens if Mr. Mehta runs two hospitalization bills in one year. Suppose the total hospitalization cost for the first time is Rs. 2 lakhs and then next time again it is Rs. 2 lakhs. The first bill will be covered by the base plan which is Rs. 3 lakhs but out of the next bill only 1 lakh will be paid in case he has a top up plan. This is due to the fact that only when a single claim amount exceeds the deductible limit will the top up plan kick in. Thus in this case despite having a health insurance plan for Rs. 6 lakhs Mr. Mehta will have to pay Rs. 1 lakh from his pocket.
In such a situation the super top up plan will be beneficial. So let’s assume Mr. Mehta has a super top up plan of Rs. 6 lakhs with Rs. 3 lakhs as deductible. The first claim of Rs. 2 lakhs is covered by the base plan; however next time when he again runs a bill of Rs. 2 lakhs then Rs. 1 lakh is covered by the base plan and the remaining 1 lakh by the super top up plan. Thus Mr. Mehta need not pay anything from his pocket.
Both plans offer similar tax benefits. Which plan you choose will depend on your requirements and health condition. If you do not suffer any major health issues or are not afflicted by a chronic ailment then a top up plan will suffice. However in case you do suffer from any affliction that may require multiple or frequent hospitalizations do consider the super top up plan.
Regardless of which plan you choose it is always advisable to understand the policy, its exclusions and fine print well before making a choice.