Top-Up vs. Regular Health Insurance: What's the Deal?
When considering health insurance, you may have come across top-up plans. But how do they work, and how are they different from a regular health insurance policy?
This guide will break down:
✔ What a top-up plan is & how it works
✔ How it differs from a regular health policy
✔ When to choose a top-up plan
✔ How much you can save with a top-up plan
What is a Regular Health Insurance Policy?
A regular health insurance policy provides coverage from the first rupee spent up to the sum insured.
✔ How it Works:
- Covers hospitalization costs from day one
- The insurer pays all eligible medical bills up to the policy limit
- No deductible applies – The policy kicks in immediately
✔ Best for:
- People who want comprehensive health coverage
- Individuals who want to avoid out-of-pocket payments
- Those with moderate medical expenses
Downside? Higher premiums!
What is a Top-Up Plan?
A top-up plan is an additional policy that provides extra coverage but only after your medical bills exceed a certain limit (deductible).
✔ How It Works:
- You buy a base health policy (e.g., ₹5-10 lakh sum insured)
- A top-up plan (e.g., ₹10-25 lakh) starts covering costs only after a set deductible is crossed
- Each individual claim is assessed separately for the deductible
✔ Best for:
- People who already have a base health plan but want more coverage
- Those looking to increase health coverage at a lower cost
- Individuals expecting high medical expenses (e.g., major surgeries, critical illness)
Downside? The deductible must be paid first before the top-up kicks in.
Key Differences: Top-Up Plan vs. Regular Health Insurance
| Feature | Regular Health Insurance | Top-Up Plan |
|---|---|---|
| When It Pays | Covers all medical bills from the first rupee | Kicks in only after the deductible is met |
| Premium Cost | Higher | Lower (More affordable for higher coverage) |
| Coverage Amount | Limited to sum insured | Can provide higher coverage at a lower price |
| Best For | Everyday medical needs, minor hospitalizations | High-cost treatments, long-term medical expenses |
If you already have a basic health plan, a top-up policy is a more cost-effective way to increase coverage.
Example: How Top-Up Plans Work
Scenario 1: Regular Health Insurance
- You have a ₹5 lakh health insurance policy
- Hospital bill: ₹6 lakh
- Your insurer only pays ₹5 lakh
- You pay ₹1 lakh from your pocket
Scenario 2: ₹5 Lakh Base Plan + ₹10 Lakh Top-Up
You have ₹5 lakh base + ₹10 lakh top-up (with ₹5 lakh deductible)
Hospital bill: ₹6 lakh
First ₹5 lakh covered by base policy
Remaining ₹1 lakh paid by top-up (No extra payment by you!)
Result: Higher coverage, lower premium compared to a ₹15 lakh standalone plan!
Who Should Choose a Top-Up Plan?
- If you already have employer-provided health insurance but need extra coverage
- If you want higher coverage but don’t want to pay high premiums
- If you are at risk of expensive medical treatments (e.g., heart surgery, ICU stays)
A top-up plan is NOT useful if you don’t have a base policy or if you expect small medical expenses.
How Much Can You Save with a Top-Up Plan?
- A ₹20 lakh sum insured policy might cost ₹35,000 per year
- A ₹5 lakh base + ₹15 lakh top-up may cost only ₹20,000 per year
✔ Savings: ₹15,000 per year while still getting ₹20 lakh coverage!