What is a top up health insurance? How does it work?
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.
Advantages of Top Up Insurance
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:
- Buy a separate policy or
- Enhance my existing cover
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.
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