Want to upgrade your health insurance cover? Here’s why top-up, not new policy is the way to go

Nitin Khurana has been paying the premium for a health insurance policy of Rs.10 lakh for himself and his wife. With rising healthcare costs and age, he realises that the amount is not enough. As he was debating whether he should enhance his cover to Rs.15 lakh or take an additional Rs.5 lakh policy, he came across top-up plans. How should he increase his cover? Should he get a new policy or a top-up plan?

Nitin Khurana’s concern about the insufficient cover that his existing health policy provides is justified. A serious illness or an accident may require expensive treatment and exhaust his health cover. So he needs to increase it. A top-up plan is an additional coverage at a lower cost for people who have an existing health policy. It takes care of expenses that result from a single illness, but are higher than the cover provided by the existing plan. Since it provides the necessary additional coverage at a low cost, a top-up plan makes sense for Khurana.

He has the option to buy a new regular health policy with a Rs.5 lakh cover, or can upgrade his existing plan by Rs.5 lakh. However, both these work out as expensive options. A top-up plan worth Rs.5 lakh, on the other hand, will cost much less. The cost of the top-up plan is linked to a factor called ‘deductible limit’. It is a predecided limit mentioned in the schedule and only when the cost of a single illness crosses this limit does the top-up plan kick in. The higher the deductible, the cheaper the top-up plan. The primary policy reduces the risk for the insurer.


A top-up plan generally covers only single-incidence hospitalisation. This means that the top-up plan kicks in only if the hospital bill exceeds the deductible limit during a single hospitalisation. Some plans do not come with the limit of a single claim and can be used for any illness beyond the deductible limit for the entire year. These plans are known as super top-ups. Top-up health plans are designed to enhance the existing policies to cover the actual healthcare costs. The point is not to duplicate but to buy additional coverage at a reasonable cost. Top-up plans ensure that there is sufficient cover and that insurance does not run out when the actual need arises.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.