Most of us by now are aware of the importance of health insurance and have at least some sort of arrangement to take care of medical emergencies. However, there still remains a big gap between the expected requirement of medical insurance coverage and the actual coverage held by each individual.
Most salaried individuals are covered under the group insurance coverage by their respective organisations. These covers are typically up to Rs 3 lakh sum insured per employee, rarely exceeding Rs 5 lakh sum insured. These covers are also family floaters, which mean that the sum insured is shared between all the covered members of the family.
Medical inflation
Also, another very important aspect of health insurance is medical inflation, which is approximately rising at a scale of 15-20% every year. The treatments are getting expensive every year and hence there is definitely a need for higher cover.So this leaves us with a question, as to how much health insurance can be considered as sufficient?
For example, a single stent angioplasty can cost anywhere between Rs 2 lakh to Rs 5 lakh, a kidney transplant can cost from Rs 5 lakh to Rs 15 lakh, a single hip replacement can cost from Rs 4 lakh to Rs 7 lakh.
These numbers give us an idea that such unfortunate illnesses require a higher amount of health insurance coverage.
The best possible solution to tackle this problem would be to increase your existing health insurance coverage. But if that is not within your capacity, especially if its employer’s group insurance coverage; then you may need to think of alternate solutions.
Lower premiums
Top-up and Super Top-up insurance products are plans which can provide insurance coverage over and above the existing insurance covers and are priced at much lower premiums than basic health insurance plans. Such plans could be the answer to ‘sufficient insurance coverage at affordable premium rates.’
In these products, the coverage starts beyond the deductible and hence the existing insurance has to be completely exhausted before the utilisation of this insurance or has to be borne by the insured.
This makes the product really affordable. In a top-up plan, a deductible, i.e. the amount borne by an individual either by existing insurance or by self payment is applicable on each and every claim. On the other hand, in a Super top-up plan, the deductible is applicable per policy period; which means that once you exhaust the deductible amount, then you become eligible for utilising the Super top-up sum insured. As you may understand from the working of both plans, Super top-up premiums are slightly expensive than top-up premiums.
Far lower
By buying top-up plans, you not only increase your level of coverage to the desired level but also pay for a premium rate that is far lower than the amount that you have needed to pay in case you had to buy a full cover of the same level. This works in compliment to your existing health insurance and stays with you through the inflation.
For example, say if your company provides you a group health insurance with sum insured of Rs 3 lakh, you could buy a top-up of sum insured of Rs 12 lakh with a deductible of Rs 3 lakh. You would now have a cover of Rs 15 lakh and the premium that you pay for this sum insured is far less that what you would paid for a full cover of the same sum insured.
Almost all health insurers offer top-up plans in their product offerings. Buying a top-up policy is not different from buying any health insurance cover. Important things that you need to ensure is that there are no restrictions in the product other than the deductible limit and choose your sum insured and deductible amount wisely. This way you are ready for inflation or any unfortunate events that may occur.
(The writer is Head of Product Development at SBI General Insurance)
