Taking Cover. Bolster your health insurance with top-ups

You may have taken a health cover early on in your career. But is the insurance, which you took a while ago, enough to cover healthcare inflation? According to a recent report from advisory firm Willis Tower Watson, medical inflation in India has been over 10 per cent for the last few years and is expected to be 11.3 per cent in 2018.

Insurers expect healthcare costs to escalate by around 15 per cent every year. You will need an individual or a family floater policy for at least ₹10-15 lakh. You can always take a second plan, but that may entail paying a large premium.

Therefore, a top-up or a super top-up policy can be taken at a fraction of the cost you would incur for a regular policy.

Increasing your health insurance cover by taking a top-up policy is cost-effective. Companies such as Apollo Munich, ICICI Lombard, United India Insurance, HDFC ERGO and Bajaj Allianz offer such policies. A basic health cover of ₹5 lakh would cost a 35-year-old ₹8,500- ₹13,500 a year, for covering himself, his wife and their child.

On the other hand, a top-up policy with a sum assured of ₹10 lakh and a deductible of ₹2-3 lakh would cost only ₹4,300-6,330 (in addition to the premium for the basic cover).

There are some conditions attached, though. All top-ups are taken with a ‘threshold’ level or ‘deductible’. Let us assume you have a basic health cover for ₹3 lakh and then choose to take a top-up cover for ₹10 lakh. Payments become due from the top-up policy only after you cross the threshold level.

In the above example, the threshold level of the basic policy is ₹3 lakh. The top-up cover would come into effect only after the ₹3 lakh in the threshold level is exhausted. Suppose you make a claim of ₹7 lakh, the base policy would pay you up to ₹3 lakh and the top-up would pay ₹4 lakh. Suppose you have a regular policy of ₹5 lakh and a top-up for ₹ 10 lakh with ₹5 lakh as the deductible. If you run up two bills of ₹ 3 lakh each, your top-up policy will not pay you anything, as the deductible level is not breached. So in this case, you will have to pay ₹1 lakh from your own resources.

Super top-up option

This shortcoming of top-ups is overcome by super top-up policies. HDFC ERGO, Apollo Munich and United India Insurance are among the few that offer this cover.

Now, assume that you have a basic cover for ₹3 lakh, and take a super top-up for ₹12 lakh with ₹3 lakh as deductible.

If you have a claim for ₹4 lakh, and later in the year run up another medical bill of ₹4 lakh, the super top-up would fill in with ₹1 lakh (₹3 lakh from basic cover) for the first time and the entire ₹4 lakh during the second time.

Super top-up policies also offer large covers in excess of ₹ 15 lakh.

The premium for a ₹20-lakh sum assured policy from HDFC ERGO with ₹5 lakh as deductible is just ₹3,850 for a family floater (two adults and a child), if the eldest member is 35 years old.

Other parameters

Top-up policies offer cashless settlement at network hospitals if intimation is given 48 hours before any planned treatment or within 24 hours after admitting in case of an emergency. Else, the reimbursement route is available. As with a regular policy, there would be a minimum waiting period (two-three years), exclusion of treatment in case of some ailments and individual limits for specific diseases.

In case your basic policy and the top-up cover are from two different companies, informing the two insurers and getting the claim settled may be cumbersome. But if you can choose a network hospital common to both insurers, the process might be simpler. There are no claim bonuses available on top-up plans. The entry age allowed by insurers is high — 65-80 years. So, you can consider adding your parents in your top-up cover even if you haven’t done it in your regular policy.

You can take a top-up policy even if you don’t have a regular health cover.

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