The increasing incidence of diseases and the rising cost of healthcare has led to the belief that a health insurance plan has become a mandatory requirement in one’s financial portfolio.
Not just buying a health plan is important, having an optimum coverage is also essential without which having a health plan is like having no plan at all.
The rising cost of healthcare necessitates that one has a decent coverage amount so as to pay the huge hospital bills but the affordability factor is also an issue to be considered.
That is why, insurers have launched the Top-up and Super Top-up plans which help in supplementing the coverage level with a very little premium outgo.So, if you have an existing policy, a top-up plan would make sense if you are looking for a coverage enhancement.
Reflecting the above sentiment, Mr. Sharma, who has a group health insurance plan by virtue of his employment, decided to avail of a top-up plan for supplementing his cover. Was his decision correct? Does buying a top-up plan with a group health policy a wise move?
The answer is ‘No’. A combination of a group health plan and a top-up plan is not a wise choice and there are substantial reasons to justify the answer. First let us study the limitations of a group plan:
Limited scope of coverage
The whole point of having a health plan is to provide financial assistance in almost all type of medical contingencies.
The underwriting principles of a group plan are lenient and so the company grants a limited coverage. This coverage is not sufficient to provide exhaustive coverage.
The coverage under the group plan is rigid in nature and cannot be customized as per the policyholder’s requirement. This lack of customization poses a serious problem.
A group plan would continue as long as you are employed with your employer who is sponsoring the plan or associated with the group which provides its members group coverage.
As soon you leave the job or exit from the group, the coverage stops. Though the Insurance Regulatory and Development Authority India (IRDAI) provides portability of the group plan to an individual plan, the process is ambiguous and might not yield the desired results.
Buying a new individual plan after being removed from the group plan might result in higher premiums and limited coverage (due to age and medical history) and also the renewal of the waiting period.
Scanty coverage amount
The coverage in a group insurance plan is limited and not sufficient. At today’s rate of inflation, a group health plan, therefore, does not provide the desired coverage level and is not enough.
Now that we have dissected the limitations of a group health insurance policy, it is time to factor in the top-up or super top-up plan and where it comes into the equation.
A top-up health plan is a means to supplementyour health insurance coverage at minimal costs.
Because of the nature of the plan, many of us think of adding a top-up plan with an existing group plan which is nothing but a mistake. Why? Some simple explanations –
A top-up plan has a deductible limit and claims beyond the deductible limit are honored under the plan.
Ideally, an existing base plan’s Sum Assured should coincide with the deductible limit kept under the top-up plan.
Your group plan’s coverage level might not be sufficient to meet the deductible limit and would therefore falls short making the combination useless.
Your top-up plan might not be able to fulfil the coverage level limitation which your group health plan has. A normal health insurance would only be able to that.
Your group health plan has continuity issues and your top-up plan is usually renewable for lifetime.
If you exit from the scope of a group plan, your continuing top-up plan would be useless in meeting the entire claim amount.
If you face hospitalization, the amount of the deductible limit would have to be borne by you.
Though the combination of a group health plan and a top-up plan is very cheap on the pocket but it has tremendous limitations.
If saving some thousand bucks today would result in spending lakhs a few years later, where is the wisdom in that.
Invest in a good health insurance plan even if you have a group health plan to get a customized cover suitable to your requirement and then add a top-up plan to supplement your coverage.