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The health insurance market in India has opened up and is becoming competitive. With competition we have seen new and innovative product being sold in the market. One such new product is the top-up and the super top-up plan.

Let us quickly examine what this product entails. A top up policy is meant to provide reimbursement for extraordinary expenses arising from one single illness (due to injury or disease) above a certain threshold level (called deductible in insurance speak). An example will illustrate this. One of my close relatives suffered from multiple blockages in the heart and had to undergo an expensive angioplasty procedure, which cost him around Rs. 3.50 lacs. He only had a mediclaim for Rs. 1.75 lacs and hence had to pay the balance Rs. 1.75 lacs from his pocket. If he had taken a top up policy for Rs. 3 lacs with a deductible of Rs. 2 lacs that would have reimbursed him Rs. 1.50 lacs (Total cost of Rs. 3.50 lacs less deductible of Rs. 2 lacs). Thus the top up policy would have worked very well for him.

A super top up policy on the other hand works even better as the expenses it covers are for all illnesses during the year put together and any eligible expenses incurred over and above the deductible amount is eligible for reimbursement. Thus, in contrast to a top up policy, it will also cover expenses arising from a series of moderately expensive illnesses as well as just one expensive illness. If we take the above example forward if instead of 1 single angioplasty he had them on 2 separate occasions (say once for one blockage and another for the second blockage just an example to understand the principle not really how it happens medically) and it had cost Rs. 2 lacs and Rs. 1.50 lacs respectively (total cost Rs. 3.50 lacs) the top up policy would not have reimbursed anything since it works on per illness cost (neither of the 2 illness cost more than the deductible and hence no reimbursement). A super top up policy for Rs. 3 lacs with a deductible of Rs. 2 lacs on the other hand would still have reimbursed Rs. 1.50 lacs since it aggregates the costs of all illnesses put together. So in many ways a super top up policy is like a regular mediclaim policy except that it does not reimburse the expenses incurred till the deductible amount is exhausted.

These kind of policies work well for the insurance companies as well, as the number of claims are much lower and only a few people are likely to bust the deductible amount and hence the premiums are very reasonable.

Between the 2 types (top up and super top-up), I personally prefer the super top up plan as it is easy to understand and avoids all possible future disputes as to what constitutes a 'single illness. The premium difference for the benefit provided is also not very significant.

Currently only Star Health (top up plans) and United India Insurance (both top up and super top up plans) offer such plans. The summary of the plans is given below for a Rs. 7 lac cover with a deductible of Rs. 3 lacs.

For a consumer the benefit is the ability to get partial cover for a catastrophic high cost illness at a low cost. What's more he is free to take regular mediclaim insurance for the deductible amount thus getting full coverage. In fact smart consumers can effectively get full coverage at a much lower cost by combining regular medi-claim policy with the United India super top up policy. The table below gives the cost for a male aged 30 years for a stand alone policy for Rs. 5 lacs from various companies vis-a-vis a regular mediclaim from the same companies for Rs. 2 lacs combined with a United India super top up policy for Rs. 3 lacs with a deductible of Rs. 2 lacs.

As you can see the super top up policy from United India Insurance can enable a smart consumers to save money without compromising on the risk covers. Also since it allows a maximum coverage of Rs. 15 lacs (on a deductible of Rs. 5 lacs) it enables you to get cheaper insurance for fairly large sum insured that may not be easily available from a single insurance company (for example no single company offers a mediclaim cover for Rs. 20 lacs which is what a consumer can get by taking a basic mediclaim policy for Rs. 5 lacs and a super top up policy for Rs. 15 lacs.

Off course actually getting the policy may prove a little difficult since their divisional offices (or at least the one in Mumbai) does not have application forms available for this policy and neither were they able to point to any agent who would be interested in helping me to actually acquire this policy for myself and my family. But it is definitely worthwhile for you to be persistent and get this 'super top-up policy.

Disclaimer/Disclosure: As on date of writing this article (April 14, 2009) neither Star Health nor United India Insurance is a client of the company I work for nor do the company or I have any other interests in the aforesaid companies. Neither the company (nor I) is an insurance agent or broker. You should take the advise of your agent/broker/personal finance consultant before buying any insurance product. Whilst all attempts are made to collect and present information accurately the company and I disclaim any responsibility for any expenses incurred or losses caused due to any action taken on the basis of information contained in this article.

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