Supplement your health insurance with top-up, critical illness covers

If you have a health insurance policy and want to increase the cover, you can do it either by buying a top-up plan or a critical illness (CI) cover. Both offer additional covers at lower costs. But remember, both have different functions.

“Top-up plans work on a cost-sharing mechanism where medical expenses up to the deductible limit have to be borne by the policyholder. The top-up plan will pay for expenses incurred above that limit. Riders like CI help if you have an existing health coverage and are looking for specific critical illness protection,” says Sandeep Patel, managing director & chief executive officer, Cigna TTK Health Insurance.

Broadly, a top-up plan is more useful because it covers more number of diseases. 

One should keep note of the deductible criteria that comes, along with top-up plans. Higher the deductible lower would be the premium amount. For a top-up plan to get activated, one single bill has to be higher than the allowed deductible amount. That is why a super top-up plan is better because it looks at the aggregate claim, says Naval Goel, founder & CEO, “The super top-up plan looks at the total of all the bills in a given year and covers multiple hospitalisations,” he explains. 

For women, Kapil Mehta, founder and CEO, Secure Now Insurance Brokers, specifically recommends a CI cover because of the high incidence of cancer. And most health insurance policies do not cover the expensive drugs that are used for treatment these days. But since the CI plan is a lump-sum payment, it will pay for the treatment.

A CI cover is a god option if you have liabilities. If you are detected with cancer and can’t go to work for an extended period, then you can use the money to pay your loans, points out Nikhil Apte, chief product officer, Royal Sundaram General Insurance. “Once the incident occurs, the CI cover will pay the entire amount, irrespective of how the policyholder spends it and the kind of treatment. But there is a 90-day survival criteria. This means that the claim is payable only if the patient survives for 90 days after detection of the ailment. In case of ailments like heart attack or severe burns, if the patient dies immediately, he may not get any money,” Apte says. 

Another problem with a CI is that it ends after the amount is paid. So, effectively you get paid only for the first instance and not if there is a relapse or for recurring treatment. In comparison, a top-up plan can be renewed for life. 

Some CI plans offer both reimbursements as well as a lump-sum payment. “Our CI policy is a combination of both routine reimbursements for regular ailments and the lump sum for CI. For instance, if the policyholder suffers from any CI such as heart ailments or kidney disease, he will get a lump sum. But the cover will continue as a regular health cover even after that. But it will cover all other ailments except the ailment for which the lump sum was paid,” says S Prakash, senior executive director at Star Health and Allied Insurance.

Some other things to check out is if the top-up allows conversion into a regular policy at a later stage. Also, keep in mind the waiting period, exclusions, and pre-existing diseases in case of top-plans as well. 

Premium of base policies with CI & top-up plans

Premium for 35-year-old male with sum insured of ~5 lakh, living in a metro city with no pre-existing disease

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