With the advent of digital media, the awareness of financial products like insurance and mutual funds has increased. People are more open to investing in life or health insurance than a decade ago. Rajvir was no different. He had an individual health plan with a cover of Rs 3 Lakhs, but it proved inadequate at the time of hospitalization. Rajvir received a bill of Rs. 4.5 Lakhs for a 10-day hospital visit, and had to pay Rs. 1.5 lakhs from his pocket.
With the cost of medical care rising at a fast clip, a single health insurance policy often falls short in times of need. To increase your health cover, you can either buy a new policy or can just get top-up health insurance.
What is a top-up health policy?
Top-up health insurance is a regular health plan that provides additional coverage after the threshold of your base policy is breached. Let us try to understand how a top-up plan functions. While shopping for clothes, you must have seen offers like ‘buy two shirts and get one free’. To get an additional shirt, you will have to buy two shirts first. Similarly, top-up plans come into the picture only after you exhaust a certain amount, which is known as the deductible. For instance, Rajvir buys a health top-up plan of Rs 10 Lakhs with a deductible of Rs. 3 Lakhs. Now when he receives a bill of Rs. 4.5 Lakhs, his base policy will cover only Rs. 3 Lakhs, while the additional Rs. 1.5 Lakhs will be provided by the top-up policy.
Consider a different scenario where the top-up plan that Rajvir buys has a deductible of Rs. 4 Lakhs. For an Rs-4.5-Lakh bill, he will have to pay Rs. 4 Lakhs and then he will receive Rs. 50,000 through the top-up policy. His basic policy will cover Rs. 3 Lakhs, but he will still have to pay Rs. 1 Lakh from his pocket. A top-up policy gets activated only after the policyholder exhausts the deductible limit.
Can you take a top-up without a base policy?
Top-up policies have a deductible clause, and pay after the threshold is breached. Generally, people who have a base health insurance policy opt for top-up policies. But do you need to have a basic policy to purchase a top-up policy? It is not mandatory. Top-up policies do not explicitly state that a health insurance policy should pay for the deductible. You can take a top-up policy without having a base health plan, but it would be senseless to do that. The purpose of getting a top-up policy is to maximize your cover, but if you do not have the basic cover then there is no point increasing it. The top-up policy holder will have to pay the deductible amount from his/her pocket. To use a top-up health policy efficiently, you should have a base policy.
The benefit of having a basic policy
Having a base health cover also helps in a different way. If you have the base cover and the top-up policy from the same insurer, the insurance company may offer continuity in the waiting period for pre-existing diseases. Health insurance policies have a waiting period for pre-existing diseases, which essentially means that you cannot claim any amount before the passage of a specific period. For pre-existing diseases, the waiting period is typically 1-2 years. So, if you have a disease before purchasing a policy and you get hospitalized due to it within a year of taking the policy, the insurance company will not pay a penny. The same clause applies when you take a top-up policy. But if you take the top-up policy from the insurance company of your base policy, the waiting period may be reduced. Some insurers provide continuity in policies and consider the waiting period of the base policy for the top-up policy.
A top-up policy should be taken after proper analysis of the existing financial situation. Top-up policies provide an added layer of security and have flexible coverage options. Bajaj Allianz Extra Care Plus Policy provides cover for the whole family through a single policy. Besides being a family health plan, it offers pre and post hospitalization cover and emergency ambulance cover. You can get details of other family health insurance plans on Finserv MARKETS, a user-friendly portal for all your financial needs.
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