Top-up Schemes Can Help You Enhance Medical Cover

Experts say such plans ensure a higher sum insured at a cheaper rate. They, however, warn that one must go through the fine print to make the most of such schemes, says Preeti Kulkarni
Three non-life insurance companies -Tata-AIG, Apollo Munich and Religare Health -have rolled out health insurance plans with deductibles and top-up covers in the last two weeks. Insurers attribute the growing demand for higher sum insured to rising healthcare inflation. “Many people wish to buy higher covers of around `. 10 lakh because of the increasing cost of medical expenses and hospital charges, but they are unable to buy due to expensive premiums. Top-up covers offer policyholders the comfort of higher sum insured, while charging a lower premium,“ says KK Mishra, managing director and CEO, Tata-AIG General.
Diminishing employers’ group insurance coverage is another reason. Individuals who are covered under their employers’ group health scheme are a key target groups for such products. “Customers enjoy employer-provided health insurance, but due to cost pressures caused by growing claims ratio, insurance companies have been downsizing their group insurance portfolios by lowering the sum insured levels or introducing new sub-limits,“ says Antony Jacob, CEO, Apollo Munich. Moreover, many are concerned about losing the cover due to retirement or job switch. “Hence, there is a need for low-cost policies that can be switched into full-fledged plans at the time of retirement or when the need is felt,“ he adds.
Top-up covers or plans with deductibles could be cheaper than regular policies by up to 50%, depending on your age and sum insured. Some companies also offer add-ons at a miniscule cost (see table). Similarly, opting for a combination of regular plans and add-on instead of a single high-value policy could result in savings on premium. “Such products are ideal for individuals or families who are either already covered under a standard health insurance plan up to a specified sum insured, but want to enhance their overall coverage or are able to self-finance their healthcare requirements up to a certain limit,“ says Anuj Gulati, managing director and CEO, Religare Health Insurance.Top-ups and Deductibles Essentially, both work on the same principle -they come into the scene after the policyholders pay a part of the claim burden either from their pockets or their individual health cover (base cover, in insurance lingo). “Fundamentally, there is no difference between the two. Top-up plans `top up’ the already existing insurance policy of the customer and there is an inherent assumption that the customer already has a basic insurance cover (indemnity cover) in place,“ says Sudhir Sarnobat, CEO, medimana, a health insurance consultancy firm. Similarly, you will have to foot a part of the bill before the insurance company takes care of its share of the claim payout in the case of covers with deductibles.“This also means that one may not have to have an insurance policy in place to cover those out-of-pocket expenses. Barring these wordplays, there is no difference between deductible policies and topup policies,“ he says.Top-up vs Super Top-up While top-up covers can make up for your low base cover at a cheaper rate, you need to be careful while choosing one. Before buying a top-up or policy with deductibles, ascertain whether the fine print lets you make the most of the cover. “If the deductible applies to every claim, it is termed as a top-up cover, whereas if it applies on an annual basis it is referred as a super top-up cover,“ says Gulati. In simple terms, ascertain if the top-up comes into play after the aggregate amount claimed during the year exceeds the deductible limit or it is restricted to a single claim.
Sarnobat says a super-top-up is preferable as it takes into account multiple hospitalisations (or in case of a floater policy , claims by other family members) during the

Source : The Economic Times
Date :21/8/2014

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