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Super Top-up Health Insurance vs. Critical Illness Policy – Which is better?

With the ever-rising medical inflation, determining the appropriate sum insured is difficult. Given the way sedentary lifestyles and workplace stress are affecting the health of people, finding someone under the age of 40 years with major ailments such as heart disease is not surprising anymore. Therefore, it is critical to supplement your health insurance with various riders and plans. Today, we will look at critical illness policy and super top-up health insurance in detail.

What is super top-up health insurance?

Your regular health insurance covers you up to the sum insured you choose. However, when you purchase a super top-up plan, you will receive financial assistance even if your medical bills exceed the sum insured amount. Super top-up health insurance plans are nearly identical to standard top-up plans. The only difference is that the former kicks in when medical expenses exceed the sum insured in the policy year. Top-up plans, on the other hand, work on a claim-by-claim basis. 

How does super top-up health insurance work? 

Let's look at an example to help you understand the concept of super top-up health insurance better. 

Assume you bought medical insurance with a sum insured of Rs 7.5 lakh. In addition, you have purchased a super top-up plan for the same coverage amount. The total medical cover you have in this case is Rs 15 lakh.

After a while, you become ill and are admitted to the hospital. The hospital staff presents you with a treatment bill amounting to Rs 10 lakh. In this case, your base policy will pay Rs 7.5 lakh, and your super top-up plan will pay the remaining Rs 2.5 lakh. 

Benefits of super top-up health insurance 

Supplements group health insurance

If you are salaried and your employer covers you under corporate health insurance, the chances that cover is inadequate are very likely. You can use your corporate plan for minor medical issues while keeping the super top-up for severe medical uncertainties. 

Hospitalisation expenses

Given the high cost of medical care, if you or a family member becomes ill, the treatment may deplete your hard-earned savings. You must pay for room rent, ICU charges, and nursing bills. Sometimes the hospitalisation costs are so high that your regular health plan's coverage is insufficient to cover them. This is where super top-up health insurance comes in. It also covers pre and post-hospitalisation expenses.

One-time deductible

The insurer is liable to cover the treatment costs only if it exceeds the deductible amount. However, the best part about this policy is that you only have to pay the deductible once and can then file multiple claims without having to pay anything out of pocket.

Tax benefits

Super top-up health insurance, like standard health plans, provides tax benefits under section 80D for amounts ranging from Rs 25,000 to Rs 75,000, depending on the policyholder's age.

What is a critical illness policy?

A critical illness policy provides financial assistance if you are diagnosed with a life-threatening disease. Instead of reimbursing you for the treatment bills, the insurer pays you a lump sum payment under this policy. The compensation you receive here offers flexibility in terms of usage, and you can put it to any use you see fit. Some of the diseases covered by the critical illness policy include cancer, multiple sclerosis, kidney failure, strokes, and major burns. 

How does critical illness policy work?

To help you understand the working of critical illness policy, here is an example. 

Suppose a close friend of yours has purchased a critical illness cover with a sum assured of Rs 15 lakh. After a few months of buying this cover, your friend is diagnosed with cancer. Following diagnosis, as soon as he submits the report, the insurer will provide him with the claim amount of Rs 15 lakh. Instead of using the money for medical treatment, he used it to repay existing debts, saving his family from becoming indebted. 

Benefits of critical illness policy​

Income replacement

Life-threatening diseases can sometimes rob people of their ability to work. In such cases, the payout provided by this policy serves as a replacement for the lost income and covers household expenses and other necessities.

Tax benefit

The payout you receive under the critical illness policy is tax-free under section 80D of the Income Tax Act.

Treatment abroad

Regular health insurance policies do not cover treatment received abroad. However, with critical illness coverage, where a lump sum is paid after a life-threatening disease is diagnosed, you can use the money to get yourself treated in a foreign country.

To conclude 

Both super top-up health insurance and critical illness policy have their own set of benefits. And they both supplement your regular health policy. Purchasing them together can help you deal with any medical uncertainty without depleting your hard-earned savings.