Tackle Hospital Bills with Top-up or Super Top-up Plan

Shyam, a cabbie by profession, on a routine journey at night faced the trouble of a flat tyre on the highway. Since he had a spare tyre on his stepney, he could quickly replace the punctured one and begin his journey without much of a hassle. 

Just like Shyam had a stand-by spare tyre in case of emergency; you must apply a similar logic to your insurance needs too. The top-up / super top-up plans have a similar function. They act like a convenient cover after we exhaust our sum insured limit and eventually double up as your back-up support system.

Let us first get a basic understanding of what a Top-up plan or a Super Top-up plan really is in the insurance industry. 

  1. Top-up Plan and how it works
  2. Meaning and implications of a Super Top-up Plan
  3. Why a policyholder must expand their Mediclaim with a top-up policy 

Meaning of a Top-up Plan: –

Like we witnessed in the case of Shyam; a top-up insurance plan is similar to a stepney or a spare tyre in the journey called life. This type of top-up plan or super top-up plan is actionable once the threshold limit of the pre-existing policy is crossed. The underlying point here is that the plan is a part of the overall policy and comes with a deductible. That means; the claims will be settled by the insurance provider, if and only if, the sum assured limit is crossed. 

Let us look at an example to get some more clarity. Say, you have a Mediclaim policy of Rs.5 lakhs and a top-up plan of Rs.10 lakhs having a deductible limit of Rs.5 lakhs. If you happen to run up a medical bill of Rs. 9 lakhs then the basic policy amount will not be sufficient. In that case he can use the existing plan to pay Rs.5 lakhs and cover the balance expenses of Rs.3 lakhs with the help of the top-up plan. In this way the entire claim would be smoothly settled, without any burden on the pocket.

How does it make sense? 

Think of this as if you have a cover of Rs.10 lakhs. Now look at the rising medical costs and you know that it may not suffice in case of an unexpected emergency. In that scenario, you may want to enhance the cover by another Rs.10 lakhs. 

We now have two options- either to buy a separate policy (which will cost around Rs.10,000 a year) or you can ask your insurer to upgrade the plan by Rs.10 lakh. However, in both these cases we could tend to shell out more than we really need to. A top-up plan for Rs.10 lakh, on the other hand, will cost just Rs.5,000 a year.

So, as we just analyze the difference here, a top-up plan makes more sense when you want to increase the cover without paying out of bounds for the same.

Some points to be kept in mind while opting for a top-up plan: 

  • One does not need to buy a Mediclaim policy or a health insurance policy to purchase top-up plans
  • Threshold limit set is applicable for every tenure / year basis the plan’s terms and conditions
  • To keep the medical needs of individual policyholders is of utmost importance. It should be seen that the benefits being offered by such top up plans adequately take care of the requirements.
  • A detailed study of family medical history is highly recommended before arriving at a decision – this goes a long way in being cautious about one’s future.

These plans include the deductible limits so one must take care of the fact that the deductible amount must be equal or somewhere near to the sum assured amount. As seen with the example, the most effective use of this could be derived only when the sum assured limit is crossed. 

All we need to know about a Super top-up plan: –

While top up & super top up plans are having the same bottom line- the functionality is quite different. As we understood that top up plan covers a single claim over the threshold limit, the super top up plan helps to cover the total of all medical bills, in short entire hospitalization bill over & above the threshold limit. 

Assuming Mr. Shah unfortunately meets with an accident & has to get hospitalized and incurs a total medical expense of Rs. 6 lakhs; furthermore, a large bill of Rs. 4 lakhs is gifted to him which also happens to be his sum assured amount. In such a precarious situation, Mr. Shah can claim only Rs. 4 lakhs against his health insurance, while the balance Rs. 2 lakhs will have to be borne by him in some way. Now with the help of a super to-up plan he can smoothly settle the remaining bill amount also. 

Take another instance here to be properly aware of such circumstances- Mr. Gopal claims Rs.5 lakhs from his total sum assured of Rs.7 lakhs to meet the planned hospitalization expenses. However, a couple of months later, he unfortunately has to be hospitalized again. Now, the bill comes up to a total of Rs.4 lakhs exceeding his remaining sum assured of Rs.2 lakhs by Rs.2 lakhs. This is where the super top up plan will come to his rescue to meet the additional expense incurred by him.

Expanding medical cover with Top up or Super top up plan

We glanced through certain instances where health complications could amplify and lead to multiple cases of emergencies. We are currently in the midst of a global pandemic. Also, if we study our medical history and are prone to being hospitalized multiple times, then a super top-up plan should be ideal. The premium amount would not burn a very deep hole in the pocket when we save immensely on the hospitalization costs. However, if one does not really suffer from a chronic ailment then they can opt for just a top-up plan. 

Being far away from the risk of contracting a terminal illness could also lead us to finding a top-up plan is feasible for us. Looking at the other tax benefits, then it is almost the same for both. Hence the decision to choose either of them should solely rest on health needs. Being prepared is the safest shield we could put on during such circumstances to be able to not only fight but overcome such situations strongly and take the challenges head on.

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