Extra lifeline

Written by Adhil Shetty | Updated: Feb 7 2014, 17:30pm hrs
HealthA top-up plan can help you deal with rising medical expenses at much lower costs.
Life, being an unpredictable journey, can take a sharp turn at the blink of an eye, which could leave one physically, mentally, emotionally and financially bruised.

Kumar, for example, met with a life-threatening accident that not only left him indisposed for six months, but also hurt his savings due to the expensive treatment involved. Though Kumar had a health cover of R3 lakh from his employer, he had to pay the balance R2 lakh from his own pocket. This blow affected his financial health, from which he took much longer to recover than the injury itself.

Kumar was on paid leave for a month, recuperating, when a friend of his, Keshav, visited him. While expressing concern over his health, Keshav explained how he bought a top-up health insurance plan that would help him deal with elevated treatment costs arising from any serious disease.

A single health cover plan is generally not enough to deal with needs of an entire family. Take Kumar, for example, who had to delve deep into his savings to meet the medical expenses beyond his cover, thus affecting his future plans as well.

It is practically not possible for everyone to raise the coverage of an existing plan as it entails higher premiums. This is where top-up health insurance comes in handy. A top-up is a unique type of policy that offers the insured additional coverage that goes beyond the maximum limit of the existing policy. Such a plan comes in handy when the limit of the existing health cover has been exhausted and there are further medical costs to deal with. Whether you have a health cover from the employer or your own individual policy, it is advisable to purchase a top-up to deal with the ever-rising medical costs.

How it works

A top-up plan normally works on the basis of a cost-sharing model, where medical expenses up to a deductible limit, or treatment costs exceeding the assured medical claim, have to be borne by the insured. Under a normal policy, the insurer only deals with the costs incurred within the limit specified. The top-up plan steps in here and helps the insured deal with expenses beyond that threshold.

Currently, top-up plans available in the market offer a sum insured of anywhere between R50,000 and R15 lakh, with the deductible amount ranging between R30,000 and R5 lakh.

The underlying sum insured will provide full protection, apart from the deductible amount, which is covered by a normal health cover policy or through any other relevant source. Had Kumar gone for a top-up cover, the policy would have kicked in after the R3 lakh limit was exhausted.


An obvious advantage of a top-up is that it is cheaper than a normal health insurance policy, but only till the deductible amount is higher. It is the most affordable means of extending the health cover, through a perfect combination of a basic policy and an ideal medical top-up.

The second advantage is the ease of purchase. There are no absolute restrictions regarding the choice of companies for getting a top-up health cover. One is free to buy a top-up plan from a company other than the basic health insurance provider, without any fear of termination of the insurance contract, or any other consequences. Third, a top-up plan is available in two distinct versions individual cover and family floater and is eligible for deduction under Section 80D of Income-Tax Act.

The writer is CEO. BankBazaar.com