Think your health insurance now will cover you 25 years hence? Think again. Heard of top up plans? They may just be your answer. Read more about it in this article.
Year 2040 – You are in your late 50s. You find yourself on a hospital bed. You hear your family having a heated discussion. Your son bickering over how you got your health insurance cover wrong while you were young, your daughter wondering how you, the planner messed up and your wife, being melodramatic and offering to sell her heirloom jewellery off! They are even contemplating moving you to a cheaper, 'affordable' hospital. All this for a simple angioplasty procedure you require!
Could this happen to you? How could the cover that seems more than adequate for you now, seem so low in 25 years! Let me ask you simply: Does Rs. 50,000 seem like an extremely low health insurance cover in today’s world? It obviously does. It won’t even cover the cost of a common one day procedure like cataract or kidney stone removal. And yes, in 2040, Rs. 3 Lakhs for angioplasty at an average inflation of 10% will cost Rs. 18 Lakhs.
A seemingly large cover now, becomes shrunken, thanks to inflation and can really be a big blow to you in the future. Be it a hit on your savings or worse, you having to compromise on the healthcare quality – by opting for a cheaper doctor or hospital, it just isn't worth it.
So how much money will you need for the next 30 years?
It’s time to review and upgrade your healthcare financial plan before you start getting older (read 40 yrs) or before an alarming 'this only happens to older people' kind of ailment knocks on your door unannounced (read hypertension, diabetes, thyroid imbalance).
What are your options for an inflation-proof future?
Well the options are simple: You either create your own healthcare fund or you upgrade your overall health cover to account for inflation.
Option 1: Creating our own Healthcare Fund
Creating your own healthcare fund, like the Retirement or Education fund you may be investing in, is an option, although a fairly expensive one. Here's how:
Estimate for about 6 big and small bill hospitalizations between you and your wife from 55 to 70 years. At an average cost of Rs. 10 Lakhs per hospitalization, you would need a corpus of around Rs. 60 Lakhs at the age of about 60 years.
At 10% average rate of return, you will need to invest Rs. 1,00,000 every year for the next 20 years to create this corpus. That’s around Rs. 8400 every month to create this fund. This is a very expensive and requires a lot of consistent effort from your end.
Says Manish Chauhan, Cofounder of Jagoinvestor.com, a leading financial planning blog: "Attempting at creating your own healthcare fund is a rather futile attempt at trying to ensure 100% control over your funds. Here a person does not want to dole out small money in the form of health insurance premium to an external entity that is not in his control, hence invests 100 times the money required just to ensure he is in psychological control on how he can make use of the funds."
Option 2: Upgrade your current health insurance cover
How do you upgrade your cover?
Fortunately upping your cover, if you are healthy, is not so difficult in today's times. Here are the ways you can upgrade your coverage.
Upgrade your existing cover
Talk to your existing Insurance Company and apply for an upgrade at the time of renewal. Apply for a cover of at least Rs. 20 Lakhs.
This is the by far the simplest of all upgrades. What’s more, with this claims would be very smooth, as you would not have to jump from one insurer to another.
Port your Health Insurance and bump up the Cover
If your Insurance Company does not have a high sum insured policy, you may explore the option of porting your policy to another Insurer who has a higher cover of above Rs. 10 Lakhs.
Remember, Portability works only till you are young and healthy. The moment you/your family suffers from a chronic disease or have made a hospitalization claim, your chances of getting approval on portability becomes low.
Buy a Super Topup
Super Topup is a smart choice because of the following 2 possibilities:
a) Your current Insurance Company may not cooperate: Many Insurance Companies do not allow upgrades above the next sum insured slab. Which means, if you have a Rs. 5 Lakh cover, the Insurer will allow you the next higher sum insured, which could be Rs. 6 Lakhs or Rs. 7.5 Lakhs at best. This is because, insurance companies, consistently ridden with frauds, are suspicious of customers that request for a big upgrade. “Is there a large claim coming up”? “Is the customer diagnosed with some major illness which he is hiding?”
b) Your current Insurance Company does not have a Rs. 20 Lakhs Sum Insured coverage option: There are many traditional Insurers who have sum insured options only upto Rs. 5 or 10 Lakhs. In such cases you may have to look at either the porting option explained above or look for a Super Topup.
Super Topup is also way cheaper than an upgrade in policy
Super Topup is a supplementary health insurance cover that sits on your base health insurance plan . The Super Topup plan starts working once the coverage of your base policy gets exhausted during a particular year.
Generally, upgrading your existing cover with a Super Topup health Insurance can help make substantial savings year on year.
Here’s an example of a customer topping up his existing Rs. 5 Lakhs cover with a Super Topup of Rs. 20 Lakhs, versus him buying a Rs. 20 Lakhs single base policy.
Base + Super Topup Plan Vs Single High Cover Plan versus - Comparison
As can be seen, more than providing you a quick upgrade, a Super Topup also makes a high cover health insurance policy more affordable.
Comparison of Leading Super Topup plans in the market:
Here’s a quick comparison of the leading Super Topup health insurance plans in India.
In case you need assistance in understanding the comparison, short listing couple of products, you can click here to post a call back request with our experts