Distinguishing between a Top-up Plan and a Super Top-up Plan

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Distinguishing between a Top-up Plan and a Super Top-up Plan
Top-up and super top-up plans are effective tools given the galloping rates of medical inflation. Both are essentially plans that extend your health insurance coverage at relatively low cost. The two instruments are similar but with a significant difference. To explain this difference, let us consider the following example.

Mr. Krishnan has a family floater policy of Rs. 6 lakh to cover himself, his wife, his two children and his dependent parents. This cover proved more than sufficient until the failing health of his parents necessitated multiple hospitalizations. Mr. Krishnan ran up medical bills exceeding Rs. 6 lakh, and found it tough to gather the excess amount.

A top-up or a super top-up plan would have reduced his out-of-pocket expenses to an extent.

A top-up plan provides coverage over and above a specified threshold limit. Each time you claim against a top-up plan, you can do so only if your medical expenses have crossed the threshold limit.

A super top-up plan also provides coverage above a specified threshold limit, but this limit applies only once a year and not for each time that a claim is filed.
Now, Mr. Krishnan of the above example purchases either (i) a top-up plan or (ii) a super top-up plan of Rs. 10 lakh with a threshold limit of Rs. 6 lakh over and above his existing family floater policy. Let us consider three claim scenarios:

1. Mr. Krishnan runs up a bill of Rs. 7 lakh on a single hospitalization.

(i) The family floater will cover up to Rs. 6 lakh and the top-up plan will cover the additional Rs. 1 lakh.

(ii) The family floater will cover up to Rs. 6 lakh and the super top-up plan will cover the additional Rs. 1 lakh.

2. Mr. Krishnan runs up two separate bills of Rs. 5 lakh and Rs. 3 lakh.

The family floater policy will cover Rs. 5 lakh on the first bill and Rs. 1 lakh on the second bill since it caps off at claims of Rs. 6 lakh per year.

(i) The remaining Rs. 2 lakh on the second bill will have to be covered by Mr. Krishnan himself because the bill amount has not crossed the threshold limit of Rs. 6 lakh.

(ii) The remaining Rs. 2 lakh will be covered by the super top-up because the annual threshold limit of Rs. 6 lakh has been crossed.

3. Mr. Krishnan runs up two separate bills of Rs. 7 lakh and Rs. 5 lakh.

The family floater policy will pay Rs. 6 lakh on the first bill and nothing on the second.

(i) The top-up plan will cover the excess Rs. 1 lakh on the first bill but nothing on the second.

(ii) The super top-up will cover the excess Rs. 1 lakh on the first bill and Rs. 3 lakh on the second bill (taking the total health coverage to Rs. 10 lakh). The remaining Rs. 2 lakh will have to be borne by Mr. Krishnan himself.
In sum, the super top-up plan is a better option because it considers the deductible only once a year. Unfortunately, few insurers offer it at present, which makes it harder to come by than the top-up plan.

Written By: Deepak Yohannan
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal

For more articles by Deepak Yohannan, please visit MyInsuranceClub.com
You may contact him directly on Twitter: @dyohannan

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