What is the ideal base health insurance plus super top-up combination?

Published on / By M. Pattabiraman Twitter: @pattufreefincal

Published: March 12, 2025 at 6:00 am

A reader wishes to know, “What is the ideal base health insurance plus super top-up combination?”

If you are confused about which health insurance policy to buy, check out the free resources at the end of this article. There is no ideal base + super top-up combo. We will have to decide what is suitable for this. This depends on some basic understanding of how these products work and, most importantly, how much money we can spare.

So, let us start with the basics. Insurance is a game of probability. Why are super top-up policies less expensive than normal (or base) health insurance policies?

Top-up policies come with a deductible clause. They will not pay out if the expenses are less than or equal to the deductible amount.  Suppose the top-up policy had a deductible of Rs. 3 lakhs and a coverage of Rs. 5 lakhs.

For an expense of Rs. 6 lakhs,

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  • If you claimed Rs. 5 lakhs from a base policy, the top-up would pay Rs. 1 lakh
  • If you claimed Rs. 3 lakhs from a base policy, the top-up would pay Rs. 3 lakhs
  • if you did not have a normal policy, the top-up would pay Rs. 3 lakhs. For more examples, see the FAQ article linked above.

The higher the deductible, the lower the price (for the same amount of coverage). This is because the probability of a Rs. 5 lakh expense is much lower than that of a Rs. 1 lakh expense. Expenses here mean hospitalization expenses for the insured and potential payout or loss for the insurer.

So, a top-up policy (in this article, top-up shall always mean super top-up). With a Rs. 1 lakh deductible and Rs. 10 lakh cover, it will cost more than one with a Rs. 5 lakh deductible and Rs. 10 lakh cover.

Another key aspect of top policies is understanding them before considering base + super top-up combinations.

  • If the base and super top-up policies are from different insurers, we must pay the hospital bill and then claim from the top-up insurer. So there is little use in saying I have Rs. 1 crore super top-up unless you have that much in cash (liquid net worth)!
  • Even if both policies are from the same insurer, the chance of reimbursement is high if the insurer has some doubt about the expense list furnished by the hospital. Of course, the sales guys would say they would “assist” during claims, but that is more of a sales pitch. You cannot bank on that.

Therefore, ideally, the higher the base insurance, the lower the chance of using the super-top policy. This may seem strange to some. They would ask, “What is the use of a super top-up then?”

I see it the following way: Suppose you have an emergency fund of Rs. 1 lakh and an additional (liquid) net worth of Rs. 10 lakh. Small emergencies can be handled without touching the net worth.

However, we aim to ensure the net worth grows untouched as much as possible. So not only should we build a large emergency fund, but we should also feed it constantly.

So suppose you opt for an Rs. 5 lakh base policy and a super top of Rs—50 lakh with a Rs. 5 lakh deductible. I recommend gradually increasing the base policy each if you can afford it. It matters little if the base policy has a cover higher than the deductible.

How to combine base and super top-up health insurance policies

  • Health insurance purchase (unlike term insurance) is all about how deep your pockets are.
  • There is no right or wrong base + top-up combo. We have to make peace with what we can afford.
  • If you buy a Rs 5L base + super top-up (Rs. 5L deductible, 50 L cover), increase the base policy by small amounts each year. The insurer may not hike the cover (that year) if you have made a claim the previous year. You can increase the super top-up coverage down the line. Do not increase the deductible, though.
  • The above recommendation also applies to a Rs. 10 L base cover.
  • If you can afford it, buy Rs. 25 L base cover (family floater or individual) with a super top-up of Rs. 1 Crore coverage (family floater) and a deductible of Rs. 10 lakhs from the same insurer (if possible). This will reduce the dependence on the super top-up policy (which is, anyway, quite inexpensive). At the time of writing, this seems like a robust combination. Medical inflation will hike these numbers a few years later.
  • Caution:  If you choose a high base cover, you must be prepared to pay higher premiums (due to age and lack of insurer profits) in the future. So please ensure that you can afford to do so.
  • Most important: Try to invest a little extra for your financial goals. That extra can serve as an emergency medical corpus. See: Why we all need a corpus for medical expenses and how to build it.

Summary:

At the time of writing, a 5L base cover looks too small. 10L seems better and 15L a more comfortable. You can increase it if you can afford current and future premiums. A 5L -10L deductible (depending on the base cover) is okayif you buy the super top-up from the same insurer. The super-top should have a cover of at least 50L. Considering how inexpensive they are, you can consider increasing it closer to one Crore.

Resouces for buying health insurance

These are some helpful resources for those looking to understand more about health insurance and how to buy one: