Top-up health covers see rising interest
01 Apr, 2014 02:02 PM
When S Mohan was looking to increase the health insurance cover of his father, who was above 60, sometime back, he had the option of either going in for a new policy or for a top-up plan under the existing policy provided by his insurance company. Mohan decided to opt for the latter as it was more cost effective.

He had a basic cover (2 lakh) for his father, on which he was paying 3,000 as annual premium. He first got the sum insured in the original cover raised to 3 lakh (as there were no claims in the previous year) and then opted for an additional cover of 7 lakh, paying an additional premium of 6,000 per year. "I ended up paying three times more premium ( 9,000 in all), but I also got a cover that was five times higher than the original (2 to 10 lakh). In that sense, it was more cost effective," he remembers.

With medical inflation continuing to rise unabated (20%), India's insured population is on the lookout for add-on covers to make for the rising hospitalization expenses. As per a research done by McKinsey, India's healthcare expenditure stood at 3 lakh crore (or 4% of GDP) during 2012-13, of which out-of-pocket spends contributed to a high 61% of the total healthcare expenditure.

"Top-up plans are an attractive proposition especially for those who are 50 years and above. The pricing of such plans continues to remain attractive in the near term," Rahul Aggarwal, CEO of insurance advisory, Optima Insurance Brokers, said.

As per industry estimates, the average size of health covers in metros is around 2 lakh (with an annual premium outflow of 3,000) and 1 lakh (or 1,600 annual premium) in case of non-metros. And while the health insurance market in India is pegged at 20,000 crore with top-up plans accounting for around 10%, observers state that in the last one year, the growth of top-up plans has been higher at 25% compared to 17% in the case of other health insurance plans.

"Premiums in top-up plans are generally lower. Also, such plans are useful for those families (with elderly dependants) where multiple hospitalizations are anticipated during the policy period," Renuka Kanvinde, associate vice-president, Bajaj Allianz General Insurance said.

Insurers also say a section of the insured that are on other group health cover plans of corporates are also increasingly opting for top-up plans. Having a top-up health plan can also ensure uninterrupted coverage, say insurers.
Source : The Times Of India

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