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ATopUpforYourMedicalNeedsValueResearch:TheCompleteGuidetoMutualFunds

ATopUpforYourMedicalNeeds
Yourexistingmedicalinsurancemayfallshortincaseanemergencystrikes
ByAvneetKaur|Apr13,2015
Mostofuscanaffordtopayforthetreatmentofminormedicalproblemsourselves,butare
scaredofthehugemedicalbillsthatcomewithseriousdiseases.Didyouknowthereare
policiesthataretailormadeforsuchsituations?
Suchpolicies(calledtopuppolicies)aremuchcheaperthannormalpolicies.Youpaythe
firstoneortwolakhsyourself(calledthethresholdlimitordeductible)andifthehospital
billexceedsthat,thentheinsurancecompanypaystheexcess.Ofcourse,dependingonyour
capacitytopay,youcanbuypolicieswiththebaseamountordeductiblevaryingfromRs
30,000toRs5lakh.
Heresanexampleofhowmuchcheaperthis
canbe.AnormalhealthpolicyofferingaRs10lakhcovercancostaboutRs7,500to12,000.
AtopuppolicyofRs10lakhwithabaseamountofRs3lakhcancostaslittleasRs2,500.
Thethreatisforrealforamiddleincomehousehold,whichcantoleratemedicalexpenses
onlyuptoalimit.Whatifaterminalillnessstartseatingintoyourretirementsavings,or
maybefundsmeantforchildren'seducationormarriage?Otherfinancialgoalswillhavea
smallchancethen.
Unlikenormalhospitalisationpolicies,topupplanscomewithadeductibleorthreshold
limit.Thisthresholdlimitneedstobespecifiedattimeofpurchase.Thisistheamountupto
whichyouoryourexistingpolicycanpaythemedicalbills.Atopuphealthinsuranceplan
covershospitalisationcostsbeyondthespecifiedlimit.
Youmaytakecomfortbybelievingthatbeingintheorganisedsectoryourmedicalneedswill
betakencareofbytheemployersbuthaveyoueverwonderedwhatwillbethescenarioifthe
coverageofferedisnotabletomeetallyourmedicalcosts?Yourpresentcovermaybe
sufficienttopayforsmallillnesses,butthereisalwaysachanceitwouldfallshortincaseofa
biggermedicalemergency.Andnottoforgetthattheemployershealthcoverceasestoexist
onceyouleaveorretire.
Itstruethatabiggerhealthcover,nomatterhownecessary,maynotfitintoeverybodys
schemeofthings.Thisiswheretopupplanscomein.Theynotonlycostlessbutprovide
highcoveragetoo.
Howtopupplanswork?
Topupplansworkonacostsharingbasiswheremedicalexpensesuptothedeductiblelimit
havetobebornebythepolicyholder.Theinsurancecompanytakeschargeofmedicalcost
onlyiftheexpensescrossthedeductiblelimit.Thetopupplanwillpayforexpensesincurred
abovethatlimit.
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ATopUpforYourMedicalNeedsValueResearch:TheCompleteGuidetoMutualFunds

TopupplanscanoffersuminsuredrangingbetweenRs50,000andRs15lakh,withtheir
deductiblefallingbetweenRs30,000andRs5lakhrespectively(avaluederivedafter
consideringallpoliciesavailableinIndia).Thissuminsuredwillofferprotectioninaddition
tothedeductibleamountwhichisbeingbornebyanotherpolicyoranyothersource.
TypesofTopupplans
Topupplanscanbedifferentiatedintotwocategories.
First,thosewherethedeductiblelimitiscalculatedoneachhospitalisation.Forinstance,ifa
personhasabasecoverofRs3lakhandatopupcoverofRs5lakh,hewouldsetRs3lakh
asthedeductiblelimitasthatcanbepaidfromthebasichealthinsurancepolicy.Ifhegets
hospitalisedwithabillofRs6lakh,initialexpensesuptoRs3lakhwillbepaidbybasic
policyandremainingRs3lakhwillbecoveredbytopuppolicy.Atopuppolicydoesnot
coverexpensesuptothresholdlimit.Incase,hedidnothaveabasepolicy,hewouldhaveto
beartheRs3lakhbillandtopuppolicywillcoveramountbeyondthat.
Thesecondcategoryoftopupplansinclude'Supertopuppolicies'where,thresholdlimit
appliestototalexpensesincurredduringthepolicyperiod.Forinstance,ifapolicyholder
withthresholdlimitofRs3lakhandatopupcoverofRs5lakhishospitalisedtwice,with
billsamountingtoRs2lakhforthefirsttimeandRs2.5lakhforthesecond,thesupertop
uppolicywillgettriggeredduringsecondhospitalisationasthetotalexpenses(Rs4.5lakh)
crossthethreshold(Rs3lakh).
ThepolicywillindemnifytheclaimwithRs1.5lakh,whichistheamountexceeding
deductible.Expensesuptodeductiblelimitwillbesettledwithanexistingpolicyorbythe
policyholder.UnitedIndiaSuperTopUpMedicarepolicycalculatesdeductiblebyaddingall
expensesincurredinapolicyyear.
HowtochooseaTopupplan?
Higherthedeductible,lowerwouldbethecorrespondingpremiums.However,youcannot
choosearandomfigureasdeductiblelimit.Thisamountshouldnotbemorethanwhatyou
(oryourbasichealthpolicy)cancomfortablypayincaseofanemergency.
Asimpletopupplanhasadrawbacktoo.Ifthepolicyholderishospitalizedtwiceinapolicy
year,withbillsofRs2lakhforthefirsttimeandRs2.5lakhsecondtime,thetopuppolicy
willnotgettriggered.Itwouldpayonlyifthebillishigherthanthedeductiblelimitina
singlehospitalization.ApolloMunichOptimaPlus,BajajAllianzExtraCare,ICICILombard
HealthcarePlus,CholaMSTopUpHealthlineandBhartiAXASmartHealthHigh
DeductibleandUnitedIndiaTopUpMedicarearesomeofthetopupplanswhere
deductiblelimitrefreshesforeachhospitalisation.
Supertopupplansaremoreuseful,becauseitispossiblethatasinglehospitalisationdoes
notinflatebills,butexpensesriseanywaybecauseofincreasedhospitalvisits.Theseplans
aremoreexpensiveascomparedtotopupplans,foreg.UnitedIndia'sSuperTopUp
MedicareplancostsRs3,700annuallyforRs10lakhsuminsuredwithRs5lakhdeductible
foranindividualupto45yearsofage.WhereasUnitedIndia'sTopUppolicyispricedatRs
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ATopUpforYourMedicalNeedsValueResearch:TheCompleteGuidetoMutualFunds

2,900forsamesuminsured,deductibleandage.
Thoughthepremiumsforsupertopuppoliciesarehigherthantopuppolicies,thebenefitof
addingannualexpenses(whilecalculatingdeductible)outweighsthecosts.
Topupplansintendtoactassupplementarypoliciesprovidingdualbenefitsoflowcostand
highersuminsured.Theseareaboonforthoseabouttoentertheseniorcitizencategory,
whentheprobabilityoffallingillishighandmedicalexpensesareboundtoincrease.Those
whoarecoveredunderemployershealthinsurancepolicycanalsobuyatopupplanfor
higherprotection.Atopuppolicyissuitableforanyonelookingtobuyahigherhealthcover.

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