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What is Top Up Health Insurance Policy? How Does It Work?

Even though we live in the era of rising health care inflation, average ticket size of our health insurance is only Rs.3-4 lacs. This coverage is definitely not sufficient to fund the serious cases of hospitalization in today's time. Expenses can overshoot our limit. Hence, its important to review our medical insurance needs and plan for a supplementary plan to cover up the shortfall. Here, we are talking about top-up health plans that can benefit you by providing extra cover at a reasonable cost. 

What is Top-up Health Insurance Plan?

Top-up Health Insurance Plan is basically an add-on plan to your regular health insurance plan or a Mediclaim from your employer. Top-up plan offers you an additional cover when you exhaust your basic cover limit. Unlike your normal health insurance plan, top-up plans come with a threshold limit and covers only single incidence hospitalization. Based on your existing policy limits, you can select the threshold limit at the time of buying a top-up plan. That means, top-up plan will trigger and reimburse your hospitalization expenses arising out of single illness over and above the threshold limit. Meeting the threshold limit and single incident of hospitalization are two basic criterias of top-up plan.
Plus point is, top-up plans with higher deductibles/threshold limit are cheaper. For example, Mr. Sunil has a personal health insurance plan of Rs.5 lac for which he is paying Rs.6500 yearly premium. He would like to enhance it by another Rs.5 lac. In this case, buying a separate health plan for 5 lac extra cover would cost him around Rs.6000-7000 a year (appx. premium as of June 2017 for 30yr old). On the other hand, he can buy a top-up plan for 10 lac, that has Rs.5 lac deductibles, just at a cost of Rs.3000-4000 per year. With this, we can say a top-up plan is a sensible choice when you want to enhance your coverage limit without spending too much.
You can also enjoy the tax benefit, as premiums paid on top-up plans are eligible for income tax deductions under Section 80D of the Income Tax Act. 

How does it Top-Up Health Insurance Policy work?

Top-up plans work on cost-sharing basis. Plan gets activated only after the threshold limit of expenses is borne by policy holder, usually through a regular health policy. Lets continue with an example to understand how top-up plans work.
Mr. Sunil who has a Rs.5 lac basic cover and top-up cover for Rs.10 lac with threshold limit of Rs.5 lac gets hospitalized due to health emergency. Now, lets take three different scenarios to understand the concept completely.
  • Scenario 1: He makes a claim for Rs.4 lac. Expenses will be reimbursed by basic health plan which covers him upto Rs.5 lac.
  • Scenario 2: He makes a claim for Rs.9 lac. In this case, Rs.5 lac will be reimbursed by his regular health plan and the rest Rs.4 lac will be covered by top-up plan.
  • Scenario 3: Claim amount is Rs. 11 lac. In this case, first 5 lac will be covered by his basic plan and another Rs.5 lac (Rs.10 lac – deductibles of Rs.5 lac) will be covered by top-up plan. The rest Rs.1 lac has to be paid out of his pocket.
As we already know, top-up plans cover only single incidence of hospitalization. Suppose, Mr. Sunil has two bills to claim each with Rs. 3 lac, then top-up cover cannot be used as none of the bills are above threshold limit.
  • Both your basic health plan and top-up health plan can be claimed together for single incidence of hospitalization. Also, you can have your basic health plan and Top-up plans from two different insurers. There is no application of contribution clause; each insurer will settle his part of claim separately.
To conclude, top-up plans are the best choice to bridge the potential gap in the coverage as it helps in enhancing your health insurance limit at reasonable cost. However, do check the various criteria such as limits on expenses, waiting period for pre-existing illness pre and post hospitalization expenses and also the criteria for deductible on single illness.
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23, Townshend Road
Kolkata - 700025.
Principal Officer: Rahul Agarwal
+91 9830882728
Direct Broker: Life & General
Date Of License: 24/08/2005
CIN: U 65929 WB2005PTC 101118
IRDA License No : 310 (Valid Upto 23rd Aug, 2020)
Phone Number: 033 4001 1224/1225/1226
Email: is an online ventre of Ideal Insurance Brokers Pvt. Ltd, one of the leading insurance brokers of India. We are a eleven year young Insurance Broking company dealing in health insurance, motor insurance, fire insurance, travel insurance, Life Insurance and a whole lot of other insurance products. We work with the leading insurance companies like ICICI Lombard, Bajaj Allianz, Tata AIG, Religare, Bharti AXA, Apollo Munich Health Insurance to name a few. We understand the role of Health Insurance in any developing country. We deal in health insurance for people of all ages. We provide insurance for elderly also. Ideal Insurance is best known for the hassle free policy purchase and friendly assistance in claim processing. We help our customers with the best Claim settlement process in time of Insurance claim and ensure a hassle free experience. We have some leading corporates in India who trust us for their asset insurance.
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