Make The Most Of Health Insurance Top-Up Plans

By Kavya Balaji | November 17, 2018

It goes without saying that Health Insurance is very important for everyone. Let us tell you how you can make the most of a Health Insurance top-up plan.

Make The Most Of Health Insurance Top-Up Plans

What’s That?

It’s simple. Health Insurance top-up plans are those that serve as an addition to your main Health Insurance plan. A top-up plan covers any additional medical expenses an insured person may have to incur.

Additional Reading: Top Up/Super Top Up Health Insurance Plans In India

Do The Math

You can get a top-up plan to add to your company-provided Health Insurance cover. Many employers allow their employees to purchase top-up health plans that range between Rs. 2 lakhs and Rs. 5 lakhs.

But, did you know a top-up plan is more affordable than a Family Floater plan? We’ll tell you how.

Let’s say you purchase a Family Floater plan for a value of Rs. 5 lakhs to cover yourself, your spouse and one child. This will set you back by about Rs. 17,000 per year. However, if you opted for an individual top-up Health Insurance plan (for a 35-year old) you would only have to pay between Rs. 4,000 to Rs. 7,000 annually. Why? This is because top-up plans come with deductibles.

The deductible implies that you share costs with the insurance company. Here, medical expenses up to the deductible limit have to be borne by you. The insurance company will pay for expenses incurred above that limit.

Additional Reading: Family Floater Or Individual Health Plan?

Be Choosy

Here’s how to choose a top-up plan.

1) Decode The Deductible     

Understanding the deductible component of top-up Health Insurance plans is important to fully understanding how your plan works.

Let’s say you choose an Rs. 5 lakh top-up plan that offers a deductible amount of Rs. 2 lakhs. This means your Insurance provider will pay Rs. 3 lakhs as a maximum claim amount.

If your employer offers a health cover of Rs. 2 lakhs and you want to get a cover of Rs. 10 lakhs, what must you do? Choose a high-deductible top-up plan that gives you Rs. 10 lakh cover and a deductible amount of Rs. 2 lakhs.

Remember, in case of the deductible amount being more than Rs. 2 lakhs, you will need to dig into your financial reserves. Make sure you find a top-up plan that has a deductible that is close in value to the Sum Assured of your main Health Insurance plan.

2) Get Your Top-up Plan With The Same Insurer As Your Primary Health Policy

There is one big advantage of getting a top-up health plan that is linked to your company-provided insurance policy. The statutory waiting period for pre-existing diseases is waived. Some Insurance providers also offer continuity in the waiting period for pre-existing diseases.

Additional Reading: Introduction To Critical Illness Plans

3) Claim Income Tax Benefits

Don’t miss out on Income Tax benefits on payments of premiums for top-up health plans. These plans are eligible for tax deductions under Section 80D of the Income Tax Act.

You can claim a total deduction of Rs. 50,000 if you are paying premiums for a plan that insures yourself, your spouse, children and parents. In case you are paying the premiums for your senior dependent parents and you are a senior citizen, you get to claim up to Rs. 1,00,000 in deductions.

Additional Reading: Tax Benefits Of Health Insurance

Choose a Health Insurance policy carefully and you can save on exorbitant medical bills and stave off any sudden medical emergencies that may drain your finances.

Safeguard your health today!

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Category: Health Insurance
Kavya Balaji

About Kavya Balaji

A personal finance professional with over 10 years of experience in financial research. She believes financial literacy is important and is passionate about sharing her knowledge on the subject.

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