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Insurance Article

Why a Top-Up Mediclaim Must Cover All Costs Above Base Policy

April 05 2017
Top-up Health Insurance

Understanding top-up health insurance and deductible

Top-up health insurance is an additional sum insured to provide for any unexpected medical emergency or prolonged sickness, so that the base sum insured under the primary health policy does not fall short.

Top-up health insurance has a clause called deductible. Deductible is the amount over which the top-up health insurance gets activated. Any claim below the deductible amount will not be reimbursed under the top-up policy.

In other words, deductible is the amount of hospitalisation expenses a policyholder must pay from his own pocket, after the base sum insured under the primary health insurance is already claimed. Under the top-up health insurance, the insurance company pays hospitalisation expenses in excess of the deductible.

ICICI Lombard has a booster health insurance plan under which it offers two options – top-up and super top-up.

For its top-up plan, deductible applies for each and every hospitalisation except for claims made for any one illness or one single hospitalisation event. In case of an accident where more than one member of a family is hospitalised, deductible will apply on the aggregate claim amount.

For super top-up plan, deductible applies on aggregate basis for all hospitalisation expenses during the policy year.

The deductible applies on individual basis in case of individual policy and on floater basis in case of floater policy.

How Does It Work?

For example, an insured has a base sum insured of ₹3 lakh and a top-up policy of another ₹5 lakh with a deductible of ₹3 lakh. His hospitalisation bill has totalled ₹4 lakh. The insurance company pay ₹3 lakh of the hospitalisation bill under the base sum insured and the balance ₹1 lakh under the top-up policy.

On subsequent hospitalisation of the insured, the hospital bill amounts to ₹3.5 lakh. The insured will pay from his own pocket the first ₹3 lakh of the hospitalisation expenses and the balance ₹50,000 will be paid by the insurance company under the top-up policy. The insured had already utilised the base sum insured for the first hospitalisation.

If the bill on subsequent hospitalisation had amounted to ₹3 lakh, the insured would have had to pay the entire bill amount from his own pocket. The insurance company is not liable for any payment under the top-up policy unless the medical expenses exceed the deductible.

A deductible is thus a cost-sharing requirement under a top-up health insurance policy, wherein the insurance company is liable to bear the cost of hospitalisation above a certain amount as per the choice of the insured.

Another Example

Let’s look at another example to find out how a deductible in a top-up policy works. A policyholder has a top-up policy of ₹5 lakh with deductible of ₹2 lakh, and has a base health insurance of ₹3 lakh. The policyholder is hospitalised and the bill runs up to ₹3 lakh. The insurance company will pay ₹2 lakh (the deductible amount) from the base policy and the remaining ₹1 lakh from the top-up policy. In this case, the base sum insured of ₹1 lakh remains unutilised.

Related Article:

Your Guide to Super Top Up Plans
Face Off: Health Insurance Super Top-Up vs Top-Up

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