Can You Get A Top-Up Policy For A Critical Illness?

A top-up policy is different from a base policy, and policyholders often buy it to enhance their insurance coverage. But, are these top-ups available on critical illness policies? The answer is ‘Yes’. One can purchase a top-up policy over the base health insurance policy or even a critical illness policy. A top-up policy acts as an add-on to the insurance coverage to the base policy to provide better financial protection to the policyholder. While a basic health insurance policy covers the expenses incurred for medical treatment, a critical illness policy provides a lump sum payout upon the diagnosis of a critical illness, such as paralysis, cancer, kidney failure, heart attack, etc.

We have talked to experts to learn different ways to get coverage against critical illnesses and whether a top-up is available on critical illness policies or not.

In How Many Ways Can One Get Coverage Against A Critical Illness?

Shashi Kant Dahuja, executive director and chief underwriting officer, Shriram General Insurance, says, “There are two types of critical illness policies available: Indemnity and Benefit-based. Indemnity as the name suggests, indemnifies the insured against expenses incurred on treating the critical illnesses, while the benefit-based product provides either a lump sum or survival benefit once the critical illnesses are detected”.

However, one can also get coverage against critical illness through a rider on term-insurance policy.

Nikhil Kamdar, appointed actuary, Go Digit General Insurance, explains, “You can secure coverage for critical illnesses through various ways. A standalone critical illness policy offers dedicated coverage for specified conditions. Alternatively, you can add a critical illness add-on cover to your health insurance plan or take an additional critical illness rider in your term life insurance policy. All comprehensive health insurance policies also include coverage for critical illnesses. Finally, while not a direct form of critical illness coverage, a super top-up health insurance policy can provide crucial financial support by extending your coverage beyond the limits of your base health insurance, which can be particularly helpful when dealing with the high costs associated with treating critical illnesses”.

Says Rupinderjit Singh, senior vice president, Retail Health, ACKO, on the top-up policy for a critical illness: “A top-up policy generally is taken up to cover for extreme health situations which can be beneficial as a cover for critical illnesses or even extreme accidents. Notably, there is no restriction on taking a top-up over a standalone critical illness policy”.

So there are four ways one can get self-covered against a critical illness: a critical illness cover, a comprehensive policy covering critical illnesses, a critical illness rider in term life insurance, and top-up policies. 

Is Higher Coverage On A Critical Illness Policy Better Than A Smaller Coverage Base Policy And A Top-Up Policy On It For Critical Illness?

With all available options, it becomes confusing for potential policyholders to decide between getting critical illness coverage by a standalone policy, a rider, or a top-up.

Singh says, “In terms of affordability, a critical illness rider is relatively cheaper as compared to the critical illness policy. However, critical illness riders come with the following shortcomings”. He says, “In term insurance, the critical illness benefits come with added restrictions on the sum assured and the premium where both of them should be less than the base plan sum assured and maximum rider premium allowed”.

Thus, he recommends opting for a standalone health insurance plan with a higher coverage amount given the flexibility it offers.

Dahuja agrees, “Critical Illness Policy when taken standalone, proves to be more beneficial than coverage taken as a rider with the regular health insurance or term insurance policy. An independent policy provides better, comprehensive coverage for critical illnesses as compared to a critical illness rider. Also, it remains valid even if your regular health insurance policy lapses. This policy covers incidental expenses such as food, lodging, and travelling which are not covered in your regular health insurance policy”.

“Whether you should buy a higher coverage on a basic critical illness policy or opt for a smaller coverage with a top-up policy depends on your individual needs and circumstances. Both approaches can be valid as long as you have adequate overall coverage”, suggests Kamdar.

What To Consider While Buying A Critical Illness Cover?

Dahuja suggests buying a benefit-based cover along with indemnity because the lumpsum can protect policyholders from draining financially during critical illness. He adds, “One should consider it separately from a standard health insurance policy and should opt for critical illness policy even if a standard health insurance policy is already taken”.

However, Singh differs on the point of taking separate policies. He suggests, “We recommend buying a base health insurance plan with higher cover as it can cover for not only critical illnesses but also emerging conditions which may not be part of the critical illnesses as well as extreme accident situations”.

While buying coverage against any critical illness, Kamdar states, “You can opt for a top-up health insurance policy to get critical illness coverage. This can be utilised if your base health insurance coverage gets exhausted. The majority of the top-up policies available for health insurance in the market do offer comprehensive medical insurance coverage, including critical illness coverage. So, carefully review the specific terms and conditions of any top-up policy to understand exactly what critical illnesses are covered and the extent of the coverage provided”. He further advises to carefully review the illnesses covered, the premium amount, inflation, waiting period, potential treatment costs, and the network hospitals.

So, to get coverage against critical illnesses, explore all options providing critical illness coverage including the top-up policies, and choose the ones that fulfil your requirement.