Strengthening your health insurance cover – especially in the current scenario

The current covid-19 scenario has made us review our existing health insurance cover and fortunately for many, who do not have any kind of health insurance, to get a new cover. All the existing Mediclaim or indemnity health insurance policies provide insurance cover for treatment of novel coronavirus disease. But exorbitant hospital bills have forced us to rethink on the adequacy of our existing health insurance cover. It is absolutely necessary to have an adequate health insurance cover for self and for our family. 

Let’s understand all of these with examples,

We consider a family of 2 Adults and 1 Child. The age of the eldest member is 35 years. The existing health insurance cover is ₹ 5 lacs. The family thinks that their existing insurance cover is inadequate and they want to increase their total cover to at least ₹ 15 lacs. What should they do?

Now, we have got following options available with us:

Option 1: They can buy an additional regular health insurance policy with 10 lacs cover. For this new policy they have to pay a premium in the range of ₹ 16,000 plus.

Option 2: Buy a Top up / Super Top-up plan of 10 lacs Sum insured above the base policy, with 5 lacs deductible. For this they have to pay premium in the range of ₹ 2500-6000.

What does this term ‘Deductible’ mean: A Top-up plan and a Super Top-up comes with a compulsory deductible amount. A claim can be made in these plans only when the expenses cross the deductible amount. That means a top-up /super top-plan gets triggered only when the claim amount crosses the deductible amount.

How a Top up / Super Top-up plan work: In our example the family have a base policy of ₹ 5 lacs and buys a top-up plan of ₹ 10 lacs with 5 lacs deductible. Suppose in a case of any hospitalization, the expense reaches ₹ 7 lacs, the existing base policy takes care of expenses upto ₹ 5 lacs and as the claim amount crossed the deductible amount (₹ 5 lacs in this example), the top-up will get activated to fund the additional ₹ 2 lacs.

Having a base policy is not compulsory for buying a top-up, it can be purchased independently. So, in such a case of no existing base policy, one would have had to pay the deductible amount (₹ 5 lacs in this example) out of one’s pocket, while the top-up pays the balance ₹ 2lacs.

Why super-top ups are better option: The family have a base cover of ₹ 5 lacs and suppose have to claim twice during the same policy year. The first time, say, expenses comes to ₹ 3 lacs. And then, the second time, the expense is say ₹ 4 lacs. The base cover will pay ₹ 3 lacs in the first instance and the cover drops to ₹ 2 lacs (as the base cover is ₹ 5 lacs). So, for the second claim, the base cover therefore pays them ₹ 2 lacs only. In this scenario, a plain top-up will not get triggered as neither of the claims have, individually, crossed the deductible limit of ₹ 5 lacs. Therefore, for the settlement of hospital expense the second time, they have to pay ₹ 2 lacs from their pocket.

A super top-up, on the other hand, will consider the aggregate of these two claims during the policy year. So, during the settlement of the second claim to the extent of ₹ 4 lacs, the base cover therefore pays them ₹ 2 lacs and the super top-up will pay ₹ 2 lacs – the amount exceeding the deductible limit in the second claim.

Option 3: Buy a Corona Kavach policy to cater to the current situation.

What is a Corona Kavach Policy: Currently, on the directive of IRDAI, insurance companies have launched the Corona Kavach policy which provides insurance for the treatment of coronavirus disease. Currently, this type of policy can be purchased on or before 31st march 2021 and the policy period is 3.5 months, 6.5 months or 9.5 months. This specifically designed, standard policy, covers all expenses associated with the disease including co-morbidities and PPE costs. The waiting period for this policy is 15 days only. As this policy covers only novel coronavirus disease and that too for limited periods, the sum insured is limited to maximum ₹ 5 lacs and the premium cost is low compared to regular medical insurance.

In our example, as the maximum sum insured available for this type of policy is ₹ 5 lacs, the family needs to buy individual policies of may be ₹ 3 lacs for each member. For this, they have to pay a total premium in the range of ₹ 3,000. But this policy can be used for the treatment of novel coronavirus disease only and is valid for a max period of 9.5 months, while a health risk will always remain.

Takeaways 

  • A top-up / super top-up plan helps to increase your health insurance cover at a very reasonable premium.
  • To buy a top-up / super top-up plan, it is not compulsory to have an existing base policy. But having a base policy is always better. As the base policy takes care of the deductible amount.
  • A standard simple top-up plan gets triggered only if a single claim exceeds the deductible limit. However, a super top-up plan takes aggregate claims made during the year into account to get triggered, thus, may be far more useful.
  • Super-top up plans are very helpful to enhance health insurance cover for people at a higher age group to enhance their insurance cover, as a regular health plan will come with a high premium at such age band.
  • Ideally, one must go for a Corona Kavach policy, in the current situation, if one does not have any type of health insurance cover and also cannot afford to buy a regular health insurance plan.
  • Before finalising on a policy type, we must consider all the other policy features along with the ones discussed above.

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