Given the consistent increase in hosptial expenses, the medical insurance you have today may become insufficient after a few years. To ensure that you have sufficient cover even a few years down the line, you can choose to enhance your existing sum insured (SI) in a cost-effective manner. In addition to the restoration or NCB benefits offered by the insurer, there are two options. One, you can upgrade your existing policy with a higher SI. Two, you can buy a super top-up plan. Here is what you should know about SI enhancement.
Enhancement of sum insured
If you already hold a health insurance policy, you can enhance your SI at the time of renewal. Accordingly, your premium outgo will also increase and widen the scope of coverage. But if you find the premium outgo to be high for the increase in SI, then you can consider a super top-up cover.
A super top-up plan is similar to a regular health cover where the policyholder gets covered for hospitalisation and other medical expenses. It is different only in terms of coverage initiation. That is, a super top-up will cover you once hospitalisation expenses exceed a certain limit known as ‘deductible’. Let’s understand this with an example. Assume you have a total cover for ₹3 lakh in your base health policy and you choose to purchase a ₹5 lakh super top-up product which has ₹3 lakh as deductible. Now, during a policy year, you make a first claim for ₹1 lakh. This gets covered in your base policy. Your second claim is for ₹2.5 lakh. Now, ₹2 lakh gets covered by your base plan and the balance ₹50,000 comes from your super top-up plan. The super top-up plan comes into use as you have crossed the remaining deductible limit of ₹2 lakh.
Though sum insured enhancement or super top-up plan is cost effective and widens the coverage and benefits, there are certain points to keep in mind. First, all the waiting periods – initial, pre-existing disease and disease specific waiting period will continue to apply on the increase SI.
Second, other conditions, including co-pay and deductible, if any, will also apply on the additional sum insured.
On the positive side, as super top-up plans are similar to a health plan, they comes with benefits such as cumulative bonus, restoration of SI, and wellness programme.
Sum insured as reward
Most health insurance policies in the market offer built-in options to increase or restore your SI every year without any additional premium. Under this feature (known as restoration feature), the insurer fully reinstates the original SI once the entire health cover is used up during the policy year. Some insurers reinstate original SI even after partial exhaustion of (original) SI.
No-claim bonus or NCB is another feature through which the insurer increases your SI without any increase in your premium . However, the increase in SI comes with a limit, say, 10 or 20 per cent increase in base SI every year, usually up to 100 per cent of SI, if there is no claim filed by the policyholder.
You can even opt for the NCB rider over and above the in-built NCB in the policy for additional costs.
Though insurers reward you with an increase in SI, it has its own limitations in terms of reinstatement of SI and having a claim-free year mandatory for NCB. The pace of increase may be slower as well. Therefore, between additional increase and a super top-up plan, you can choose what works for you, based on the additional premium you have to pay and the coverage and other benefits.