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A top-up insurance policy provides you with extra coverage above a predetermined "threshold limit". It means that if you exhaust the coverage of your base insurance policy, then the coverage of the top-up policy begins. This concept can be best understood with the help of an example. Let us assume that you have a top-up plan with a coverage of Rs. 10 lakhs sum insured. Let the threshold limit of the plan be Rs. 5 lakhs. This means that the top-up policy will provide a coverage of Rs. 5 lakhs only after you have exceeded your base insurance policy coverage of Rs. 5 lakhs. If you have a claim amount that is Rs. 7 lakhs, then you will be paid only Rs. 2 lakhs (7 - 5), and not the total Rs. 7 lakhs. This is the primary difference between normal health insurance and a top-up health insurance plan.
A super-top up insurance plan considers the entire amount of all the bills you have in an entire year, and not just every individual case. Thus, even if you had two separate bills of Rs. 3.5 lakhs each, with your total coming to Rs. 7 lakhs, you will get the entire Rs. 2 lakhs (the amount that crossed the Rs. 5 lakh threshold) paid to you.
Super Top-Up insurance plans are very similar to top-up health insurance. Both are used with the purpose of keeping the total premium at a low cost while having high coverage at the same time. Top-up policies will reimburse you only if the claim amount (which is the amount for a single hospitalization) has crossed the threshold. Referring to the previous example, the top-up medical insurance helps you only when your bill amount goes over Rs. 5 lakhs every time. So, in the Rs. 7 lakh bill amount case, you were getting an extra Rs. 2 lakhs. However, if you had two separate bills each of Rs. 3.5 lakhs, then a regular top-up policy would not help because none of the bills has crossed the base-threshold amount of Rs. 5 lakhs individually. This is where a Super-Top up plan would be beneficial.
Insurance companies set a limit on the claim. This limit is called a deductible. It represents the portion of the claim that is not covered by the insurance company. The insured individual has to cover this himself before the company handles the rest of the amount. This sum of the deductible needs to be paid for by the insured, whenever there is a claim, then the excess will be borne by the insurer. The deductible acts like a safety valve for the insurance company. It safeguards them from trivial and frequent claims. To understand this better, let's use an example.
Let us assume you have a base insurance plan with a coverage of Rs. 2 lakhs, and you purchase a super top-up of Rs. 3 lakhs on top of the base amount. This means that your top-up plan is Rs. 5 lakh plan with a deductible of Rs. 2 lakhs. This amount of the deductible varies with each plan.
People often get confused when selecting between top-up and super top-up plan. Each plan has its own benefits. A normal top-up plan is less expensive in the short term, but it usually has a smaller coverage in terms of the types of illnesses. In the long run, it can end up becoming more expensive. It is better to go for a top-up plan if you do not suffer from any chronic illness or run the risk of getting a terminal disease.
A super top-up plan, however, is quite economical in the long run. It also has coverage for a wide spectrum of illnesses. It is especially good for senior citizens, who tend to have medical expenses very frequently. The cumulative coverage can be very beneficial here. It is also very useful if you think you are going to need hospitalization more than once in a year. Then again, factors such as your budget, your premium outgo, and your medical history must be taken into account before choosing any plan, so as to make a well thought out decision.
Enhance a Super Top Up plan by Religare works on the simple principle of policy deductible, which is the predefined amount that you will bear, through your own finances or any other insurance, during a medical event. Any amount over and above policy deductible will be borne by us. Simply put, if you opt for Rs. 6 lac Sum Insured with deductible of Rs. 2 lac, then 2 lac will be borne by you and 6 lac over and above the deductible of 2 lac will be borne by us during the policy period.