I read on Quora that with a top up health insurance policy I can increase my medical insurance cover to an amount like Rs 15 lakh. The premiums are supposed to be lower. I want to know how such a policy works.
Unlike normal health insurance plans, the top up health insurance plans kick in only after your hospitalization costs have crossed a certain threshold. This 'threshold' is referred to as a 'deductible' by insurance companies.
For example if you have a top up health insurance with a deductible of Rs 5 lakh, then this means that the health insurance will cover costs only above Rs 5 lakh. The initial Rs 5 lakh can either be paid for out of your own pocket or by a regular health insurance plan.
To put this in simple words - you get higher coverage for a lower premium. I will give my example. I have a health insurance cover of Rs 5 lakh. It costs me around Rs 6400 (including taxes). If I want to increase this cover to Rs 10 lakh then I can:
Both options would cost me around Rs 6400, which would double my premium.
Instead I opted for a top up insurance with a sum insured of Rs 10 lakh, with a deductible of Rs 5 lakh. This gives me a total insurance cover of 10 lakh with incremental premium of Rs 2000 (for me and my wife together). So actually I got the additional Rs 5 lakh cover for just Rs 1000.
Sachin Shah is a 30 year old Senior Software Engineer, working at an IT services company in Bengaluru. He and his wife want to plan for their retirement and also want to save for their child's education, wedding and for buying a car.View Case Study