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How to take Top-Up Insurance on Group Policy?

There is a variety of insecurities in everyone’s lives. We all want to tackle these and secure our lives. Insurance is the facility by which we can secure our future for uncertain events by paying a premium to the insurance provider. There are different varieties of insurance policies available in the market. Today we will discuss the Group policy and Top Up Insurance.

Concept of Group Policy

We all know that when an employee joins a new organization for a job, the employer provides him with some benefits. The Group insurance policy is one of those benefits from the employer. We can guess from the name of this policy that it provides coverage to a group of persons, and everyone enjoys the same benefits without any difference. Providing this facility to the employees makes them worry-free and works efficiently for the company. The employer knows that the major concern of the employees is always their family. The family of an employee refers to their partner and the kids. In some cases, the family also includes their parents. The employee feels their family is secured from risks and health issues with the help of group insurance. In most cases, the employee and their two kids are covered under this facility, along with their partner and their two kids. This scheme does not restrict the employee from insuring the parents. The employee can cover their parents under this scheme by paying some extra premium. This group insurance policy gives some benefits, such as it does not require a prior medical check-up and no waiting period is applicable. It provides coverage for prevailing health issues of the insured. Along with these benefits, it charges cheaper premiums. One more benefit of this scheme is Top-Up Insurance.

What is Top-Up Insurance?

When you avail group health insurance plan from your employer, it allows you a smaller sum assured than the separate insurance plan. If you come across a situation where this smaller sum assured gets exhausted, you will have to bear the remaining expenses on your own. This is where the option of top-up insurance comes into the picture. Top-up insurance allows you to avail of extra coverage by paying an extra premium when your claim amount exceeds the sum assured of the basic policy. This plan is a regular health insurance policy covering hospitalization costs, but only after crossing the threshold limit. Therefore, a top-up insurance policy is cost-effective to improve your health insurance cover. You can buy a base policy and a top-up plan above the base policy. By availing of this combination, you can use your base policy to claim up to the deductible amount and then use your top-up policy for remaining payments above that. Do not forget to ensure that the deductible is lesser than the sum insured in the base policy.

How a Top Up Plan Works-?

We understand that the top-up plan extends the regular health insurance policy, and it comes into the scene only when the single claim amount crosses the threshold limit. The policy comes with a deductible, which explains that it will pay for claims only when they exceed the threshold limit.

Let’s take an example. Suppose you have a regular health insurance policy of Rs. 5 lakhs and a top-up plan of Rs. 15 lakhs with a deductible of Rs. 5 lakhs. While having this combination of policies, if you’re medical bill amounts to Rs. 10 lakhs, your regular policy will pay for Rs. 5 lakhs, and then your top-up plan will pay for the remaining Rs. 5 lakhs.

This is how these top-up plans work. Please consider the following points while availing of top-up plans. You do not need to buy a mediclaim policy for purchasing top-up plans. For every plan tenure, the threshold limit is applied separately. Nowadays, medical costs have reached very high. It is very difficult for you to manage finances without a mediclaim policy and a top-up plan.

Advantages of Top-Up Insurance

After understanding the concepts of group policy and top-up insurance plans, let’s see the advantages of this plan.

  • Top-up insurance plans charge cheaper premium rates than regular policies.
  • These top-up plans help in dealing with the medical costs, which are growing higher and higher day by day.
  • These top-up plans are available with both individual policies and family floater policies.
  • Some insurance providers allow the conversion of this top-up plan into an individual health insurance policy.
  • How can we forget the tax benefits? Yes. These plans enjoy tax benefits under the Income Tax Act (section 80D).
  • No sub-limits or restrictions are applicable on the expenses for hospitalization, such as doctor fees, rent for rooms, and fees of a medical practitioner.
  • Some insurance providers allow family discounts considering the policyholder, spouse, dependent parents, and children up to certain limits.
  • There is a cumulative bonus (specified percentage) which you can avail on the sum insured for each claim-free year.
  • The option for renewability is available, along with no pre-medical check-up.

Things covered under Top-Up Plan-

  • The expenses for in-patient hospitalization such as doctor’s fees, nursing and boarding charges, room rent, diagnostic procedures, and similar expenses are compensated.
  • Pre and Post-hospitalization expenses are covered up to certain limits (in days).
  • Expenses for an emergency ambulance, organ donor, and domiciliary treatment expenses are covered up to a specified limit.
  • The day-care procedures are carried out with hospitalization of not more than one day.

Tips to consider while taking Top-Up Insurance on Group Policy

These are some common points you should keep in mind while buying the Top Up plan.

Working out the cost factor-

If you buy a top-up plan on group policy from your employer, your requirement is more coverage with a minimum cost for premium. So work out the cost factor before buying the plan. There are several factors in cost, such as the base coverage, base premium, threshold limit, the deductible, additional coverage, extra cost of the premium, etc. After calculating the possible future health issues within the family members and the cost incurred for the same, avail of the top-up plan accordingly.

Careful choice-

A careful choice of a top-up plan will give you better results in the future. Some key factors, such as the threshold limit, are applicable for every claim separately. In case of hospitalization twice or thrice a year, then the threshold limit is applicable on the bill of each hospitalization independently.

Even if the combined bill amount counts more than the threshold limit and every bill is under the threshold limit, the top-up plan would not kick in. So choose your plan and its limits wisely.

Understanding the concept of deductible-

Suppose you have availed the plan of Rs. 5 lakhs with a deductible of Rs. 2 lakhs, which means the insurance provider of the top-up plan will pay a maximum of Rs. Three lakhs as the claim amount. Your base policy should pay for Rs. 2 lakhs, or you have to bear that cost on your own. So, according to the deductible concept, if your company offers you the cover of Rs. 3 lakhs and you require the cover of Rs. 15 lakhs. In this case, the best choice is to opt for a high-deductible plan which covers Rs. 15 lakhs and a deductible of Rs. 3 lakhs. The deductible above Rs. 3 lakhs will have to be paid by you. Make sure that the sum insured of the base policy and the deductible of the top-up plan are close to each other.

Sticking to the insurance provider-

If you want to benefit from the waiting period to be waived for pre-existing health issues, you must buy a top-up plan linked to the employer-provided policy. Even if you buy an individual top-up plan from the existing insurance provider or group insurance provider (from the employer), some companies offer continuity in the waiting period for existing health issues. The waiting period continuity may not be offered for all products, specifically, if the base policy and the top-up plan are purchased.

Claiming the Income Tax deduction-

Section 80D of the Income Tax Act allows the premiums paid for top-up plans for deductions. The provisions are as follows-

  • Maximum of Rs. 25,000/- can be claimed as a deduction in case of a plan covering the holder, spouse, and children.
  • The plan covering the parents also allows another Rs. 25,000/- to be claimed as a deduction.
  • If parents are of age 60 or above, then up to Rs. 30,000/- can be claimed as a deduction.

So, if your Group Insurance Policy is not giving enough coverage, opt for a Top Up Insurance Plan keeping in mind the threshold limit and deductible.




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