What is top up in health insurance?
Health insurance top up plans protect the customer from additional costs and supplement one’s primary health insurance. Here are 5 suggestions for maximising health policy top-up plans.
- Calculate the cost
To supplement the group health coverage provided by your job, you can purchase top-up policies. Companies permit workers to purchase health insurance top up insurance policies for between Rs 2 lakh and Rs 5 lakh. The annual premium for employer-facilitated coverage is roughly Rs 1,000 per Rs 1 lakh. If your employer forbids you from purchasing a top-up policy, you can always purchase a top-up policy separately from the base policy. *
- Choose wisely
A coverage with a Rs. 3 lakh deductible will pay an extra Rs. 2 lakh if your hospitalisation bill is Rs. 5 lakh. Your typical top-up plan will not take effect if you are hospitalised twice in a year, and the two costs total Rs 2 lakh each. In a basic top-up coverage, the threshold deductible will be applied to each claim or hospitalisation. Each hospitalisation is comfortably inside the deductible limit, even when the overall price exceeds the Rs 3-lakh cap. A super top-up insurance, on the other hand, adds up all hospitalisation claims to determine the deductible maximum. In the case above, the top-up plan will pay Rs 1 lakh because the total hospitalisation costs of Rs 4 lakh exceed the Rs 3 lakh deductible cap. It is, therefore, better to purchase a big top-up plan. *
- Recognize the deductible
If a person chooses a Rs. 5 lakh plan with a Rs. 2 lakh deductible, it means that the insurer offering the top-up plan will pay a maximum of Rs. 3 lakh in claims. The insured can choose to pay the deductible out of pocket or with the amounts insured from an existing health plan. If your employer only offers a Rs. 2 lakh cover and you want a Rs. 10 lakh cover, you should choose a high-deductible top-up plan with a Rs. 10 lakh cover and a Rs. 2 lakh deductible. You will be responsible for covering the deductible if it exceeds Rs. 2 lakh. Make sure your health insurance top up policy’s deductible is, therefore, close to the amount protected under your primary health plan, whether it be an individual or employer-sponsored group plan. *
- Keep only one insurer.
The largest benefit of purchasing a top-up linked to an employer-provided policy is the elimination of the waiting time for pre-existing conditions (PED). Some insurers give continuity in the PED waiting period if an individual top-up is purchased from the same business as an existing health insurance or the employer-provided plan. The waiting period will be reduced by the number of years the individual is covered under the base policy. However, not all products give consistency in the waiting period. When the base and top-up plans are purchased jointly, waiting period continuity might not be offered. *
- T. deduction claim
As per Section 80D of the Income Tax Act, premiums for top-up or super top-up plans are deductible from income. A maximum of Rs 25,000 may be deducted under Section 80D if the premium is being paid for a plan that covers the payer, their spouse, and their children. For premium contributions made to a plan that covers parents, a further deduction of Rs 25,000 is possible, and if the parents are 60 years of age or older, a deduction of up to Rs 30,000 may be made. **
Choose health insurance top-up plans that offer coverage once you go over the threshold limit. Before purchasing a health insurance top-up plan, it is crucial to have a thorough awareness of all the factors.
* Standard T&C Apply
** Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.
# Visit the official website of IRDAI for further details.
## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
