Expenses on medical treatments are exorbitant... and ballooning day-by-day at a very steep rate. Therefore, it is imperative that you should
(a) Have adequate health insurance cover, and
(b) Regularly review and enhance it without fail.
If not, even one illness in the family could cause extensive damage to your finances. In fact, you will routinely come across people who literally turned penniless overnight after a hospitalization in the family.
As it is, very few people are insured for medical exigencies. And even those who have health insurance cover, are typically insured for an inconsequential sum of about Rs.1-3 lakhs only. This, you would agree, is a pittance today.
Accordingly, sometime back, I had suggested a strategic security system against healthcare expenses. As discussed therein, the 2nd layer of security is an insurance plan that tops up the basic 1st layer cover.
Top-up plans, as you may be aware, come into play only when your medical expenses exceed a certain pre-decided minimum level, called 'deductible' in the insurance jargon. (In all other respects, they are quite similar to the conventional mediclaim policies.)
In this category, you will come across two variants namely Top-up and Super Top-up.
Let us, in this blog post, see how these two differ and why, despite being more expensive, Super Top-up is generally a better alternative than Top-up.
Top-up Health Insurance Plan
Under a top-up plan, you will become eligible for a claim only if a particular illness costs more than the deductible amount. Assume you have a normal insurance of Rs.3 lakhs and a top-up of Rs.10 lakhs with a deductible of Rs.3 lakhs.
Now if your one illness costs Rs.5 lakhs, you will get Rs.3 lakhs from the normal plan and Rs.2 lakhs from the top-up plan.
But, what if you suffer two illnesses during the year that cost you Rs.3 lakhs and Rs.2 lakhs? In this case, you will get Rs.3 lakhs from the normal plan for the 1st illness. However, you won't get anything for the 2nd illness as your 1st plan limit is already exhausted and the deductible (i.e. the minimum amount you have to bear for a single illness) is Rs.3 lakhs under the top-up plan.
Super Top-up Health Insurance Plan
Under a super top-up plan, you will become eligible for a claim when the sum of all illnesses exceed the deductible amount. Assume you have a normal insurance of Rs.3 lakhs and super top-up of Rs.10 lakhs with a deductible of Rs.3 lakhs.
Now, similar to the Top-up plan, if your one illness costs Rs.5 lakhs, you will get Rs.3 lakhs from the normal plan and Rs.2 lakhs from the super top-up plan.
The difference is when you suffer two illnesses of say Rs.3 lakhs and Rs.2 lakhs during a year. Then you will get Rs.3 lakhs from the normal plan for the 1st illness. And since the deductible level is already achieved with the first illness, you can now claim Rs.2 lakhs for the 2nd illness under the super top-up plan.
Since there are more chances of suffering multiple day-to-day medical problems in the family vis-a-vis the serious illnesses, it is prudent to buy Super Top-up policy vis-a-vis the plain Top-up plan. It will cost you more than a Top-up plan, but less than simply enhancing the cover under your normal plan itself.
All in all, a great way to protect your financial well-being, against the risk of medical ill-being.
