Why is health insurance the most important in 2020?


W e are all familiar with Life Insurance and to give them the due, Life Insurance Companies have actually done an appreciable job of promoting the product. We most often find people having a Life Insurance cover, either as Term Insurance, Whole Life Insurance, ULIP, Money Back etc. But in today’s Covid 19 (Coronavirus) scenario how many of us actually have a health insurance?

What Is Health Insurance?

In simple terms, it is an insurance that is designed to help us meet unforeseen health care and hospitalization expenses so that you can focus on the treatment and not worry about the costs associated with it. As per  various studies very few families/individual have any sort of health insurance.

With government too focussing on providing a minimum coverage of Rs 5 lakhs to a majority of poor people, it is time now to look at health insurance as a necessary product in our portfolio. In the current Covid 19 scenario the need for a comprehensive health cover has increased manifold. The expenses related to the treatment can be met by the policies offered by health insurance companies thereby providing us access to the best of treatment and peace of mind.

Changing trends in health insurance

A large population today requires and demands better health care facility. Today’s treatment too has undergone a change with modern facility and better hospitals. The cost of lot of these treatments continues to be very high and puts a strain on our resources. The health insurance companies today offer policies with comprehensive benefits which provide cover at affordable premium.

Medical emergencies often come unannounced and it is prudent to be prepared to tackle them. It is unfortunately not always feasible for most people to pay out of their pocket towards these contingencies, which necessitates the need for a health insurance.

Why is then Health Insurance care so poor in India?

Health Insurance is something we forget to notice, either due to lack of awareness or may be feel nothing can happen to our life. We may use it for tax purpose without actually realising its true benefit. Covid-19 is a case in point. With the rising number of cases it has definitely made all of us think about health insurance. Health Insurance covers come in the form of indemnity cover, personal accident, critical illness and others which support hospital treatment. But will just a normal cover ensure that all will be taken care of? Is it not possible that our expense for a treatment can overshoot the sum insured? What will we do? We are here discussing about Top Up Health Insurance.

Consider an individual; he takes a Family Cover of around Rs3 lakhs for his family which for example let’s say consists of him, spouse and two children, all depended on him. All the four are covered together.    Suppose due to an unfortunate emergency the full amount or the major part of the Sum Insured is exhausted, what would you do to meet any additional expense that you might face. You will need to pay the remaining from your savings which in turn can affect other priorities. This is where super top up product becomes very useful.

What are Super Top Up Health insurance plans?

A super top up health plan, as the name suggests, ‘tops up’ your existing health insurance plan by upgrading your cover amount to a higher one and kicks in when your existing cover has been exhausted. In other words, it’s a health insurance plan that gives you additional coverage over and above your existing policy.

In the event you’re hospitalized and have exhausted your health insurance plan, the top-up plan will come into effect. You can buy a super top up health plan to supplement your independent mediclaim policy as well as your corporate health policy. Even if you don’t have a health insurance policy and believe that you have financial backing that can cover the first few lakhs of your hospitalisation, you can still buy a super top up plan keeping in mind the soaring healthcare costs.

How does it work?

At the time of buying a super top up plan, you have to specify a threshold limit, up to which this plan will not be covering you. This limit is also known as deductible. This is usually the amount your existing health insurance policy covers you for. In case your hospitalization bill amount is more than the deductible, the super top up plan comes into effect. This way, you don’t have to dip into your savings.

Given that the cover offered by a super top up plan is less than that of a policy that starts from the ground up, it’s cheaper. Therefore, a super top up plan is a cost-effective way to upgrade your health insurance cover.

Let us take an example for a Top Up Plan with a Sum Insured of Rs10 lakhs with a deductible of Rs3 lakhs.

Now what does that mean?

Suppose a person is hospitalized and has a normal indemnity cover of Rs3 lakhs. Imagine if due to the seriousness of the illness the cost of the current treatment goes beyond the available limit of Rs3 lakhs and ends up somewhere around Rs5 lakhs. The additional amount of Rs 2 Lakh will then be required to be met from other sources most probably from the savings. Or, if part of the existing cover had already been utilised, say up to Rs.1.50 lakhs, it will still result in a higher shortfall, as only Rs.1.5 lakhs is left to cover this hospitalization

When you have a Top Up Cover, this additional requirement can be met. When we say that a Top Up plan has a deductible of Rs3 lakhs for a Rs10 lakhs cover, it means, the first Rs.3 lakh bill of hospitalization in that year has to be met from the base policy and any amount beyond Rs3 lakhs will be met by the Top Up Plan. Here the additional amount of Rs 2 Lakhs will be met from the Top Up Plan.

Having a Top Up plan as a standalone cover is possible but it is advisable to have a Top Up along with a base Health Cover. Base cover can be either from employer or bought by self.

Gift yourself financial freedom

Nobody can predict when a medical emergency will arise, and it is prudent to be prepared always. Upgrading from your existing health insurance plan with Top Up will ensure that your future is secured wealth wise.



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