Most prospective policyholders are often flummoxed by the barrage of jargons tossed at them by health insurance agents. Misinterpretation of jargons might force you to pay through your nose, though.
A single hospitalisation could rob one of lifetime’s savings. Considered a lifesaver, a high-cover medical policy helps one avoid paying huge medical bills but with a catch. A base policy (BP) with a high Sum Insured (SI) would not be affordable for many as the premium is high. However, there are cheaper alternatives — top-up and super-top-up plans.
Policyholders often get confused with the two add-on policies and jargons such as deductibles, Unlimited Restoration (UR), etc. Relax, we would arm you with sufficient knowledge.
Shubham Mehrotra, Subject Matter Expert (PW20447), Health Insurance, PolicyBazaar, said, “Both are add-on policies providing an additional protection over and above the SI of the base medical policy, and they could be purchased anytime. That is, both the policies come into force only if the medical bills exceed the deductible amount.”
On the difference between the two, Mr. Mehrotra said, “Top-up plan’s coverage kicks in only when the deductible limit is reached for every single hospitalisation bill/claim separately. Whereas the super-top-up policy kicks in if the aggregate amount of the multiple claims in a year exceeds the deductible limit together.”
What is a deductible?
It is the portion of the hospitalisation bill, which an insurer does not cover and the policyholder must pay via the base policy or from his pocket. That is, the insured must pay the bill up to the deductible amount and only the excess would be paid by the insurer (of the top-up or super-top-up policy). Higher the deductibles, lower would be the premium cost.
How does it work?
Let’s understand this with the example of two individuals — Shreyas and Tejas. Deductible ₹5 lakh (BP). Top-up or super-top-up: ₹10 lakh cover over and above deductible.
Shreyas:
First hospitalisation:
Claim: ₹2.5 lakh
Covered: ₹2.5 lakh (from BP)
If top-up: zero (Single claim less than deductible)
If super top-up: zero (Total claim less than deductible)
Second hospitalisation:
Claim: ₹4 lakh
Covered: ₹2.5 lakh (balance SI)
From pocket: ₹1.5 lakh*
If top-up: zero (single claim less than deductible)
If super-top-up: ₹1.5 lakh covered
Reason: Total claim (minus) deductible
Tejas:
First hospitalisation:
Claim: ₹6 lakh
Covered: ₹5 lakh (from BP)
If top-up: ₹1 lakh (excess of deductible)
If super top-up: ₹1 lakh (excess of deductible)
Second hospitalisation:
Claim: ₹4 lakh
Covered: Zero (Remaining SI is nil)
From pocket: ₹4 lakh*
If top-up: zero (Single claim less than deductible)
If super-top-up: ₹4 lakh (Total claim exceeds deductible)
*Unlimited restoration: Whenever a claim is made, the SI is refilled automatically to its initial coverage unlimited times. If Shreyas and Tejas had unlimited restoration benefit in their base policy, they would not have had to pay from their pockets as the SI would have been restored.
Mr. Mehrotra said, “Having a BP with an unlimited restoration benefit and a super-top-up policy with high SI is advantageous for policyholders if they could afford it. If cost is a concern, then a top-up policy could be opted.”
(The writer is an NISM & CRISIL-certified wealth manager)
Published – March 17, 2025 07:02 am IST
