When regular health plans are inadequate to meet medical expenses, a common solution is to opt for a top up plan. Inflationary pressures and increasing cost of medical treatments may often make the sum assured of a regular health plan insufficient. That is when a top up plan comes into play by enhancing the existing sum assured of a regular plan. Regular and top up plans are aimed at providing a health cover, though with a galore of differences in the way they work. Here is a snapshot of the differences.
- The Basic Difference
A regular health plan offers a health cover up to the pre-determined sum assured of the policy. It does not cover any extra expenses that may be incurred over and above the sum assured. Top up plans are add-on plans that could be purchased over and above a regular health plan to meet additional medical expenses. Where a regular health plan may often seem insufficient to meet medical emergencies, a top up plan gives an extra bit of protection without having you to shell out from your pocket during a medical emergency.
A regular health insurance policy offers protection up to the pre-determined sum insured. Bills, diagnostic reports, and other medical documents are to be produced in evidence of treatment or hospitalisation. Once this claim is raised, the expenses incurred are settled. The tenure of a health insurance plan is generally for a year. So you could make claims up to the sum assured for the tenure.
A top up plan works distinctly apart. The plan pays out claims only if your expenses have crossed a pre-determined limit known as the “deductible or threshold limit”. This limit is specified at the time of purchase of the plan and, is that amount over and above which your claims are entertained.
For example: Consider these two policies
Policy A: Regular health insurance policy with a basic sum assured of Rs. 2 lakhs.
Policy B: Top up policy of Rs. 8 Lakhs with a deductible or threshold limit is Rs. 2 lakhs.
Claim 1: Rs. 2 Lakhs medical treatment expenses. The claim is paid out from the regular health insurance policy. The top up policy does not kick in as:
- The amount is well within the scope of the base health insurance policy and,
- The threshold limit for the top up to kick in has not been reached.
Claim 2: Rs. 6 lakhs hospitalisation expenses. In this claim the regular health plan with a cover of Rs. 2 lakhs would not be adequate. Thus:
- The regular health policy would provide cover as per its terms for Rs. 2 lakhs.
- The top up plan kicks in once the bills exceed the pre-decided threshold limit of Rs. 2 lakhs, In this case the balance amount (6lakhs-2 Lakhs) of Rs. 4 lakhs would be paid by the top up plan.
- Cost Factor
If you find your health cover insufficient and desire to increase/enhance it, a top up plan works out as a cheaper option in comparison to buying another regular plan. Top-ups would give you more coverage at a lesser premium. The premium you would be paying depends upon the deductible decided upon.
- Managing Policies
Instead of maintaining multiple health plans for a high health cover, it is easier and hassle free to have a top up plan. A single plan would be sufficient to reimburse higher medical expenses.
- Medical Tests Pre-Policy
Top-up policies generally do not insist pre-inception medical tests, up to the age of 55 years, unlike the regular health insurance policies which is at 45 years.
A top up plan reimburses medical expenses for a single illness. In other words, the expenses for a single injury or disease should be over the threshold limit to be eligible for a claim. On the other hand a regular health plan reimburses expenses up to the sum insured amount of the policy- one or more claims.
- Riders on Plans
Where you have the option to customise your regular health plan with riders of your choice, top up plans being add-ons do not come with this benefit. Riders can be bought only with a base plan and do not exist independently, or with a top up plan.