You must have considered buying a health coverage plan for your family, but have stepped back after reading the complex terminology and perplexing technicalities. You’re not alone! Many people in India face the same difficulty while buying a family health insurance plan. People are often confused between two types of health coverage plans, standard health insurance and a health insurance top-up plan.
This article will provide detailed guidance on the working of both types of health insurance plans and their individual benefits.
How does coverage work in a regular health insurance plan?
A regular health insurance plan provides comprehensive coverage for medical expenses up to the sum insured from the first rupee. It does not have a deductible. Coverage applies to all medical costs from the initial amount. Claims are settled directly with the insurance company or through a TPA (Third Party Administrator) from the first amount claimed.
How do regular health coverage plans work?
A standard family health insurance plan offers extensive financial protection against a wide range of medical treatments and hospitalisation expenses, covering costs up to the full sum insured right from the beginning of a claim.
Unlike other types of insurance plans, a regular health cover plan does not have a deductible, meaning the insured individual is not required to pay the medical bill out-of-pocket before the family health insurance plan coverage starts. Here is how a regular health insurance plan pays out coverage:
- When you raise a claim, the settlement process is typically handled directly by the insurance company or through a designated Third-Party Administrator (TPA).
- The insurance provider then pays the covered medical expenses, starting from the initial amount claimed.
- The insurer reimburses the medical expenses incurred during the medical emergency.
This policy covers all eligible medical costs, from the first rupee incurred, regardless of size.
What is a health insurance top-up plan?
A top-up health insurance plan is a type of health coverage that is available only when a threshold limit (i.e. deductible) is crossed. It has lower premiums than a regular health insurance plan, which only activates after a specific limit. It is suitable for those who want to enhance existing coverage at a lower cost and can afford the deductible.
How does a top-up health insurance plan work?
A top-up health insurance plan always has a deductible clause. The deductible is the amount you must pay out of pocket before the top-up plan coverage begins. It is activated only when the medical bill exceeds the deductible amount. Once the policyholder pays the deductible, the top-up policy covers the expenses exceeding that amount.
Difference between a regular and a top-up health insurance plan
Both regular and a top-up health insurance plan work in the same way. Their actual difference lies in the beginning of their coverage period. Accordingly, here are the broad differences between the two types of health insurance plans:
| Feature | Regular health insurance plan | Top-up health insurance plan |
| Coverage | Offers extensive medical expense coverage, providing benefits up to the total insured amount starting from the initial cost. | Coverage begins once expenses exceed a specified deductible amount. |
| Premiums | Broader coverage typically results in higher premiums. | Lower premiums due to coverage beginning only after a predetermined deductible is reached. |
| Deductible | There is no deductible amount that the policyholder needs to pay out of pocket before the coverage kicks in. The insurance company directly covers eligible medical expenses up to the sum insured. | A deductible is a prerequisite for a top-up health plan. It represents the specific amount you must pay yourself before the top-up coverage becomes active and starts covering medical expenses. |
| Usage | Covers all medical costs starting from the first rupee spent. | This coverage becomes active once the medical expenses surpass a specified deductible. |
| Suitability | It is best suited for individuals seeking full and immediate health insurance protection who are comfortable with higher premium costs. | Suitable for those who want to enhance existing coverage at a lower cost and can afford the deductible. |
| Claim process | Claims are settled directly by the insurance company or through a Third-Party Administrator (TPA). | After the policyholder pays the deductible, the top-up policy covers any remaining claim amount. |
| No claim bonus | A no-claim bonus, which adds to your sum insured, is awarded by the insurance company for not making a claim. | Such a bonus is not available in a top-up health insurance policy. |
Which one is better between a regular and a top-up health insurance plan?
Both regular and top-up health insurance plans have their benefits and uses. A choice between the two types of insurance plans purely depends on your individual needs, your financial condition and the urgency of your medical emergency.
- A regular family health insurance plan offers complete coverage from the first rupee spent on medical expenses up to the insured amount. In contrast, a top-up health insurance plan provides coverage only after the deductible threshold is met.
- Regular health insurance plans typically have higher premiums than top-up plans due to the deductible associated with the latter.
Consider your budget and the urgency of your needs when deciding between the two types of health coverage. If you need full and immediate coverage, a regular health insurance plan is recommended, while a top-up plan is suitable for extending your sum insured at a lower cost.
Wrapping Up
Now that you are familiar with the benefits and working of regular and top-up health insurance plans, you can choose between the two based on your requirements. While selecting the appropriate health coverage, it is crucial to carefully read the terms and conditions of the health insurance policy given in the policy document.
