How to increase your health insurance cover in a smart and cost-effective way

One of the most common mistakes that people make when it comes to health insurance is depending on that one policy offered by the employer. It is important to understand that medical costs are skyrocketing and porting from a corporate health plan to a personal cover is quite cumbersome. But with a higher cover, comes higher premiums and not everyone may be able to afford it. "The smart way to go about increasing your cover is by understanding your needs and what your policy covers. Avoid any add-ons that you may not need," said Amit Chhabra, head- health insurance, Policybazaar.com. So here are some ways by which you can boost your health cover without paying a bomb.

FLOATER PLANS

A family floater policy provides health insurance to the entire family unit in a single policy. In some cases, this policy can also include family members beyond the nuclear family of parents and young children, like grandparents. Such a policy comes with a list of benefits and exclusions but considers the entire family as one unit. So if one member of the family makes a claim in a policy year, the cover reduces by that much on the entire unit or family for the remaining policy year. The biggest advantage of buying a floater policy is that is cost-effective. The fact that such a policy covers the entire family under one sum insured limit is why it is cost-effective. "If you already have a health insurance cover, then try covering your spouse and child in the same plan. A floater plan will be cheaper compared to buying individual policies," said Chhabra.

Then there are floater plans that come with restoration benefit as well. In such a policy, the insurer restores the original sum insured after it gets exhausted. This means even if you consume the complete sum insured, your insurer will restore the entire amount. Such policies are economical as well unless you opt for too many features.

In such a policy, the premium is determined by the age of the oldest member, so if you are a young family with lesser age gaps, you'd benefit the most. Family floater plans are eligible for tax benefit under Section 80D of the Income Tax Act. Also, you can double the benefit if you pay for your parents' policy as well.

TOP-UP AND SUPER TOP UP PLANS

There's another way of getting that extra cover. You can go for top-up plans that serve as a great way to increase the cover but also keep the costs in check. A top-up health insurance plan is a regular indemnity plan that covers hospitalization costs but only after a threshold limit is crossed. This limit is called a deductible. A deductible is that portion of the claim amount that is not covered by the insurer and has to be paid by the insured person before the benefits of the policy can kick in. This means you can use your base health insurance policy to make a claim up till the deductible amount and any payments over that can be covered through a top-up plan. You can pay the deductible yourself or from a health plan that doesn't have a deductible.

The deductible feature of a top-up plan makes it cheaper because it reduces the liability of the insurance company. For example, for a 35-year-old, under the top-up plan, a cover of 5 lakh with a deductible of 2 lakh would cost around 3,000 as an annual premium, while the regular indemnity product for 5 lakh cover would cost around 7,250. A super top-up plan is similar to a top-up plan but covers the total of all hospitalization bills above the threshold limit. Top-up plans cover only a single claim above the threshold limit. Super top-up plans are also eligible for tax saving under Section 80D of the Income Tax Act.

**Source: MINT

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