Most of us purchase health insurance cover keeping in view our current needs. What we forget during this process is how this sum will become inadequate a couple of years later. With age, our needs and liabilities change, and what was enough then may not serve the purpose now. When we are young & single, we can easily make-do with vanilla health insurance plan. However, this coverage would fall flat on our face as we grow older, get married and have kids. Hence, it is very important for us to review and enhance health insurance cover as per the life-stage we are in. So how do we go about this? Let’s look at some of the options that you can explore:
Restoration option or refill benefit
Do you know that there are health insurance plans which come with a built-in restoration benefit that can automatically reinstate your basic cover, if you exhaust it during the policy tenure? In such a plan, health insurers can reinstate up to 100% of sum insured, so technically, you are covered for double the amount of your basic cover size. Sounds good, doesn’t it?
Having said that, what you need to make note of is that such plans are not as useful as they are made to appear on the paper. Let’s understand this further. Firstly, let’s look at the cost aspect. A refill benefit plan would cost you more than the standard health plan. A regular health plan with SI of Rs 5 lacs for a 35yr old would cost somewhere around Rs 6,000 vis-à-vis Rs 7,000 that you would have to pay for restoration benefit. However, the bigger limitation lies in the restored amount, which can only be used for illnesses that is not related to the one for which you had claimed earlier on.
This brings us to our second option – opting for a second health plan.
Additional standalone insurance plan: You can choose this option if you are willing to spend higher amount as premium and have no issues managing multiple insurance policies. Personally, I would not want to spend Rs 6,000 as premium for additional coverage of Rs 5lacs when I could easily get the same (perhaps, more) coverage by paying lesser premium.
Now, you may argue stating that it is not a bad option if you are covered already under a group health plan. But it’s not the best option either. Many employers today are increasingly offering their employers the option to enhance their health coverage through voluntary top-up plans. The annual premium for this will be anywhere between Rs 3,000-Rs 6,000 per family, depending on your age, insurance package etc. My preference for voluntary top-up plan is based on the fact that unlike additional health cover, voluntary top-up plans provisions for pre-existing illnesses.
Now, let’s move on to our next option.
Top-Up plans
Top-Up plan can be classified as your back-up plan in case you exhaust the entire base cover. It would come into force only after you cross your threshold limit. Let’s assume that you have Rs 5lacs health cover and top-up plan of Rs 15lacs. Your total coverage, in this scenario will be Rs 15lacs (Rs 5lacs from base plan + Rs 10lacs from top-up plan, with Rs 5lacs deductible).
Unfortunately, top-up plans comes with its own set of loopholes: your top-up plan would pay only if your claim amount is above the threshold limit. Let’s assume that you have a base plan of Rs 5lacs and your hospital raises two bills of Rs 3lacs each. Your top-up plan will not help in this scenario as no single bill amount is above Rs 5lacs - your minimum threshold.
This is where our last option comes into play.
Super Top-Up plan
Super Top-Up plan wins hands down if we compare it with all the options that we touched upon. Simply put, it is an improved version of Top-Up plan that would come into force as soon as you exhaust your base cover. What differentiates Super top-up plans from top-up plans is the fact that it takes the total bill amount into consideration, irrespective of the number of bills your hospital raises.
It is important to note that Super Top-Up plan would cost you a little bit more than Top-Up plan. If you have a health insurance policy of Rs 5lacs and plan to enhance it further by Rs 5lacs, you will have to spend around Rs 2,000 for a Top-Up plan and Rs 3,000 for a Super Top-Up plan. What goes in favor of Super Top-Up plans is that they go beyond the aggregate threshold limit.
As a final word on the topic, these plans offer a far more efficient, economical and relevant solution for those who are already covered under an employer group health plan or are already in possession of an individually-purchased standalone health policy, but want to enhance their insurance coverage.
by Yashish Dahiya – CEO & co-founder, Policybazaar.com
