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Upgrading existing policy vs buying top up Health Insurance

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12 Oct, 2020 by vijay

I've read Mahavir write earlier on increasing cover at renewal as much as possible till 38-40 instead of a top-up because companies make it very difficult to increase cover at older ages. And that top-up should be looked at only if the price of increasing cover is 20-30% more than buying a topup. The increased cover is apparently pain-free and uncomplicated during claim servicing etc.


However, with the recent ~30%+ announced premium increase even with existing cover, the cost of increasing sum insured is looking increasingly unaffordable. Moreover, this increased cover will again result in increased premiums for the rest of my life. Does the advice then make sense now and what would the pitfalls if say at 38 now, I keep the base cover as it is (10L) and increasing the top-up as needed till old age?


Some articles in ET also more or less advocate going for a top-up than increasing the base cover.



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12 Oct, 2020
Anuj Jindal

Hey Vijay,

What is your current age and what plan are you on?

I'll give you advice specific to your scenario if you can share details.

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13 Oct, 2020
vijay
Hi Anuj, I'm 37 and on a 10L individual plan from Royal Sundaram (Lifeline Supreme) taken in 2016. I will move to a floater after getting married for which they've promised to rollover continuity benefits already accrued.
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13 Oct, 2020
Anuj Jindal

Thanks Vijay for the details.

At 10L SI, your Supreme policy would be 20 L by the time you renew your policy next year. As a claims expert, I can tell you it's a fairly sufficient cover for a family of 4.

I think you should re-visit this question of increasing cover in another 10 years. Your Supreme policy would be sufficient till then. Given your age, think of buying a super top-up policy from Royal Sundaram after about 10-12 yrs, for about 15-25L with 10L deductible.

Sellers have incentive to frighten you into buying more and more cover. Just don't fall into the trap.

Anuj Jindal

Co-founder

SureClaim

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19 Oct, 2020
vijay
Thanks Anuj and sorry for the late response, I was busy doing further research based on your replay. I'm assuming your advice holds good only for people on plans like Sundaram's Supreme where the NCB is not rolled back even in case of a claim. ICICI's iHealth for example decreases the accrued NCB in the event of a claim by the same amount (10%) it is increased for a claim-free year. Being tied to Sundaram while good for higher coverage without paying an extra penny (thanks to the permanent NCBs), leaves me vulnerable however to higher premiums they charge at older age band crossings compared to competitors. They don't allow obtaining quotes for topups/super topups on the website, so I don't know how cost-effective it will be when the time comes to buy the topup 10 years down the line as you've suggested. I don't want to receive a shocker in terms of the combined base + top-up premium at that point as I'll be practically ineligible for a new policy anywhere else. I've dropped a mail to their (horrendous) customer service but if you have any additional insight here or otherwise, do let me know. As an aside, it is a bit puzzling as to how the company is able to offer a 10L base cover which has become 20L through permanent NCBs at half (or thereabouts) price of a 20L base cover and can only put it down to something akin to a loyalty reward than hardcore economics.
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