Amid demanding lifestyle characterised by extremes such as excessive food and stress and inadequate physical activity and sleep, healthcare is the one of the major concerns. For everyone, from elderly to newborns, medication and hospitalisation play a pivotal role in ensuring healthy families.
While age-related ailments are inevitable, even the younger generation suffers from poor immunity, fueled by lifestyle-related choices. If not planned properly, prohibitive treatment costs and skyrocketing medicine prices can wreak havoc with a middle-class family’s well-balanced budget.
Health insurance is your safety net for your finances in the event you or your family members get hospitalised. Health insurance plans offered by insurers come in two basic variants – individual insurance and family floater. While an individual health insurance plan is a separate insurance for an individual with defined cover, family floater plan covers an entire family, in which the coverage (insurance amount or the sum assured) can be utilised by any of member of the family individually.
Typically, Indian policyholders cover themselves for a maximum of Rs 3-4 lakh and the average coverage under individual health insurance policies is even lower. With medical inflation in India estimated in double-digits, a sudden hospitalisation could spell trouble for anyone. Rising costs of hospitalisation may render your individual health insurance cover inadequate to cover all expenses.
Also, a basic health insurance policy may not cover expenses related to recovery phase like extensive nursing care, counseling sessions, rehabilitation or physiotherapies, follow-up medical investigations and diagnostic tests etc. What can you do in such situation? You can enhance your health cover significantly – over and above your basic policy – with tools such as Riders and Top-Ups without corresponding increase in the premium.
A rider is an add-on that gives you additional benefits on your basic health insurance policy. Some of the commonly available riders are Critical Illness Cover, Hospital Cash Benefits, Personal Accident Cover, Maternity Cover, Out-Patient Dental and Convalescence Costs. An add-on cover reduces your out-of-pocket expenses significantly, if your base policy is not adequate. Availability of these riders depends on insurers and they may not be available with all policies. These policies can either be taken separately or in addition to the base policy.
Top-Up policies, on the other hand, are regular indemnity plans covering hospitalisation, but only after exhaustion of a particular threshold limit known as deductible. Deductibles are not covered by the insurance company and have to be paid by the insured (it can start at Rs 1 lakh). Deductible clause makes the Top-Up plans inexpensive because the smaller claims do not need to be paid by the insurer.
When the severity of the illness is high like instance of a heart problem, which can push your basic treatment cost beyond Rs 5 lakh or more, a Top-up cover can be of major help.
While both Riders and Top-ups have their specific benefits, policyholders often find it difficult make a choice between the two options. However, the math is not that difficult. It depends on your own assessment of your future medical concerns. When you know the estimated cost of your treatment, opt for a Rider. And, when you do not know the estimated cost that can run quite high, then opt for a Top- up cover. But since most Indians do not have sufficient health insurance, both Riders and Top-Up plans can be bought as the incremental costs are minimal.
The author is Executive Director, HDFC ERGO General Insurance Company