Are you aware of this restriction about super top up insurance policies?

Super top insurance covers are essential to handle large hospital bills. However, they suffer from a restriction that is not so obvious. Here is what you need to know

Published: January 22, 2020 at 1:21 pm

Last Updated on August 30, 2021 at 9:07 am

Super top-up health insurance covers medical expenses above a threshold. In this day and age of ever-increasing medical costs and complex medical tests and procedures, a large medical insurance cover is extremely important. While super top-up insurance is an essential purchase, they suffer from a restriction or limitation that buyers need to be aware of.

Before we begin, you can now watch for free the first lecture of the goal-based portfolio management lecture series. The contents of the course and FAQ can also be found there.

How much health insurance do we need? There is no clear cut answer to this important question. The only practical answer is, “as much as we can afford”. Top-up insurance makes a big difference in the cost.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

The cost of a base health cover of say Rs. 5 Lakh plus a super top-up of say Rs. 20 lakh would be 30-40% lower (typically) than a base health cover of Rs. 25 lakh. Why? Insurance is a game of probability. The insurer is betting that a medical expense of more than Rs. 5 lakh is less likely and is willing to offer the top-up at a lower cost.

Top up or super top-up cover? In the above example, we considered super top-up insurance of Rs. 20 lakh. This will come with a deductible of say Rs. 5 lakh. This means the super top-up cover will kick-in only if the hospital expense is above Rs. 5 lakh.

For a single claim, there is no difference between the two.  If there is the possibility of multiple claims in a year, especially when you have a floater base policy, then a super-top has an edge (and therefore more expensive than a top-up).

In a super top-up, the cover kicks in when the sum of all medical expenses incurred in a policy year, across claims is above the deductible. For a top-cover, each claim has to above the deductible. You can see examples and how to choose a policy here: How to buy a Super Top-up Health Insurance policy. For a personal account, see: Finally got me a Super Top Health Insurance.

If you are looking to buy a base or super top-up health insurance policies, then here are some useful resources:

What is the restriction with super top-up and top-up insurance policies?

In general, for any insurance policy cashless is more a privilege than a right. The hospitalization has to be in a network hospital, the cost and course of treatment proposed by the hospital should be fairly acceptable to the insurer to allow cashless claims.

For a non-network hospital and in case the insurer has doubts about the treatment or illness, they would ask the insured to first pay for the treatment and then apply for reimbursement.  This means, in spite of having a health insurance cover, we must pay out of our pocket first.

This can be problematic with a top-up or super top-up insurance cover. Typically top-up claims are handled via reimbursement mode. Only in the rare case where the base and top-up policies are from the same provider and if the insurer is satisfied enough a top-up cashless claim be entertained.

Consider a “small” base+ top-up combinations, say for example Rs. 5 Lakh + Rs. 20 Lakh and a total hospital bill of say Rs. 15 lakh. Rs. 5 lakh would be paid by the base cover (say by cashless) and the insured will have to Rs. 10 lakh out of their own pocket first and the only claim it back via the top-up or super top-up policy.

Nowadays insurers have started offering large top-up policies: Rs. 25/50/75 or 100 lakhs. For a person who is not a crorepati an Rs. 100 lakh top-up cover may be affordable. However, that entire Rs. 100 lakh health insurance will not be available to him at the time of need.

Say the person has only Rs. 25 lakh net worth then the effective top-up insurance is only Rs. 25 lakh and not Rs. 100 lakh. This is because most top-up claims, especially for such amounts, would be via reimbursement. When the person can only afford Rs. 25 lakh, the claim would be of that amount only.

Buying super top insurance of several lakhs is no doubt a good idea and should be done if the premium is affordable. However, this limitation of handling claims via reimbursement and the need for a comparable liquid net worth to first handle expenses must be recognized by the buyer.

Opting for a super top-up policy from the same company as the base policy could be reasonable choice but may limit the total insurance cover.


Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)