What is a top-up plan and why is it important to have one?

What Is A Top-Up Plan?

A top-up plan is a personal medical coverage best taken when you are in the pink of health to ensure you don’t face exclusions or premium loadings. It is meant to complement an employer-sponsored coverage and be able to support you throughout your life.

Personal health management is a complex and often overlooked topic. Insurance covers unforeseen risks. Based on that, health insurance is subject to medical underwriting, which means that as an individual, your pre-existing conditions will be subject to loadings or exclusions from the insurer. This is why it is important to have a personal health coverage subscribed when you are healthy enough to avoid major exclusions.

Most employers will offer a standard medical coverage to their staff. However, as an employee, you need to be aware of the coverage and limitations of the plan. In most group plans, pre-existing conditions will either not be covered or be subject to a waiting period for them to be covered. More importantly, when you leave a company, your medical coverage ends. What happens if you have existing medical conditions then?

Why Is It Important To Have One?

For this reason, it is always recommended that employees do not entirely rely on their group medical plan and always have a private plan that keeps them covered for major health risks regardless of their professional status. This private plan works either as a top-up to the employer-sponsored medical plan, or as a primary plan in the event you no longer benefit from a group medical plan, change jobs or retire.

Here are the main reasons why taking a top-up health insurance plan before developing any serious or chronic medical condition is important:

1. Lower Premiums
   

   Health insurance premiums are typically based on your age and health status. If you already have a pre-existing condition, insurers may apply loadings making the cost of premiums higher, or it may be excluded from the coverage. Buying a top-up plan earlier helps secure lower premiums before any health issues arise.

2. Asset protection

   A top-up plan provides high maximum coverage limits that will generally go above and beyond your employer-sponsored medical plan. Most of them will have limits to the extent they can cover your large medical expenditures. By purchasing it early, you secure high coverage limits and have enough financial protection in case of large unforeseen medical expenses, which may arise from chronic conditions or critical illnesses later in life. Group medical insurance plans often come with sub-limits or caps on certain expenses, such as room & board, doctor’s fees, or specific treatments. ICU could be capped at $10,000 and daily room & board is a maximum of 30 days. These sub-limits can create significant financial risks if you face a high hospitalization bill, especially in the case of serious or chronic conditions that require extended or costly treatment. For example, some group medical policies cover cancer treatment for up to $20,000 per year. But cancer treatment fees can go much higher; it is not uncommon to see bills pile up to $80,000 per year – which in this case creates a gap of $60,000. Top-up plans address this gap as the $60,000 will be covered under the high annual limits (generally $1 million and above).

   Such gaps in coverage leave you responsible for paying a substantial portion of the medical expenses out of pocket. By taking a top-up health insurance plan before developing any serious health condition, you can bridge these gaps and ensure comprehensive financial protection, especially when faced with high medical bills that exceed the limits of a group health insurance policy.

3. No Denial of Coverage
   

   Some insurers may deny coverage or impose exclusions if you already have a pre-existing condition. Buying a top-up policy before developing serious health issues ensures that you have access to medical coverage when needed.

4. Comprehensive Protection

   As health conditions become more complex and new treatments arise, the cost of medical care keeps increasing. A top-up plan helps planning to mitigate the high costs associated with treatment for chronic or serious conditions, reducing the financial burden on you and your family.

5. Continuity of Coverage
   

   By going through personal medical underwriting when subscribing to your top-up plan, you benefit from protection that no longer depends on your work-related coverage and that you can keep throughout the various stages of your life.

6. Peace of Mind

   Having a top-up plan in place offers peace of mind, knowing that you are better prepared financially to manage future medical costs without being worried about insurance limitations or out-of-pocket expenses.

In short, purchasing a top-up plan before developing a serious or chronic medical condition helps to ensure comprehensive coverage in the event of a health crisis, ensuring that you are better equipped to manage the higher medical costs associated with your health needs.

How can top-up insurance help me?

Top-up insurance is essentially an additional layer of coverage that enhances your existing health insurance policy, particularly when your primary plan has a limit on benefits or a deductible. It’s a cost-effective way to boost your health insurance coverage without buying a whole new policy. Here’s how it can help:

1. Increased Coverage Limits: If your primary policy has a cap on coverage, a top-up plan can raise those limits. For example, if your regular health insurance covers up to $5,000 and you need additional coverage, a top-up plan could cover expenses beyond that limit.
2. Filling Gaps: Top-up insurance often covers expenses not included in your primary insurance, such as specific treatments or high-cost surgeries. A top-up plan especially helps if you have a basic health plan but want to stay covered for unexpected, expensive medical events.
3. Lower Premiums: Top-up plans are usually cheaper than buying a full-fledged insurance policy because you’re essentially paying for the extra coverage beyond your existing plan’s threshold. This makes it a more affordable option for enhancing your coverage.
4. Higher Deductibles: Typically, top-up insurance plans have higher deductibles (the amount you pay out of pocket before insurance kicks in), but if your existing policy already covers a significant portion of your medical costs, the extra coverage is worth it in case of major health issues.
5. Emergency Expenses: If you’re in a situation where you need urgent medical care or hospitalization, top-up insurance can help with the higher-than-usual bills, especially if your primary policy is running out of coverage for the year.

In short, top-up insurance acts as a backup to extend your existing insurance’s reach, particularly during expensive or unexpected medical situations. Would you want to know more about how it works in a specific context, or is there a particular insurance policy you’re looking to enhance?

How much does a top-up plan cost?

Medical premiums are subject to high variations depending on factors such as the level of benefits provided, area of coverage or underwriting rules. We recommend you contact your dedicated advisor for a tailor-made proposal. As a general rule, we recommend top-up plans that come on top of employer-sponsored coverage to focus on the major health risks (such as critical illnesses or chronic conditions management) as opposed to comprehensive all-around coverage that will be more expensive and may overlap with your corporate plan on more minor risks, such as general outpatient expenses. This controls the additional costs of a top-up plan while ensuring you’re covered for major risks.

As an example, a top-up plan covering in-patient and major outpatient events with a $6,000 deductible and a limit of 3.9 million/year will cost around $3,000 per year at standard terms for a 35 year-old individual, which represents a budget of about $250/month. For a 45 year-old individual, the annual premium will be $3,800.

This is a budget of about $250 or $320 per month for a top-up plan that will cover your expenses in private or public hospitals in Singapore or abroad, allowing you to access the best places of treatment in case of a major health event while protecting your personal assets.

With premiums increasing as you age, you can play with the plan options to reduce non-essential coverage items or add some deductibles to your plan, to keep major risks covered while mitigating premium spending. Most top-up plans will cover policyholders after their retirement, allowing them to keep access to the private healthcare system and avoid depending on a public health system under ever-increasing pressure from a generally ageing population.

How to approach my top-up plan conversation?

Managing health costs requires tailored advisory and long-term planning. At Diot-Siaci Asia, our private advisors have extensive experience in accompanying our clients throughout their health insurance journey and advise them on the best options for their situation at various stages of their lives.

Approaching a conversation about your top-up insurance plan requires some preparation to ensure that you fully understand your needs, the options available to you, and how to communicate them effectively. Here are some steps to help you approach that conversation, whether you’re talking to an insurance agent, or advisor, or even reviewing the details yourself.

1. Know Your Current Health Coverage

Before talking about a top-up plan, you need to fully understand the details of your existing health insurance policy:

• Coverage Limit: What is the maximum amount your current policy covers? Are there exclusions you should be aware of?
• Deductibles: What is the deductible (out-of-pocket cost) that you need to pay before your insurance kicks in?
• Waiting Period: Are there any waiting periods for specific conditions like pre-existing diseases or maternity?
• Exclusions: Are there certain treatments or conditions that your current plan doesn’t cover?

Tip: Take a copy of your current policy and review it in detail before the conversation. Highlight any sections you don’t fully understand or feel need extra coverage.

2. Evaluate Your Medical Needs and Potential Gaps

Identify what kind of medical events you may need additional coverage for:

• Past Health History: Have you or any family member experienced major illnesses, surgeries, or frequent hospitalizations?
• Family Health Considerations: Do you have dependents who might need frequent medical care or special treatment (e.g., elderly parents, children, or chronic conditions)?
• Critical Illness: Are you concerned about covering critical illness treatment that might go beyond your current coverage?
• Annual Usage: How much of your current coverage do you typically use in a year? Would a top-up help cover the rest?

Tip: Make a list of possible scenarios where additional coverage might be useful (e.g., hospitalization costs, expensive surgeries, chronic treatments, etc.).

3. Research Available Top-Up Plans

Before speaking to an agent or insurance representative, do some research about top-up plans available in the market. Consider:

• Premiums and Deductibles: Understand how much the premiums are and compare different deductible options. If the deductible is high, ensure you can afford it in case of an emergency.
• Coverages Offered: Compare coverage options—some top-up plans may cover specific areas like critical illness, cancer, or hospitalization expenses, while others might be more general.
• Exclusions and Limitations: Check if there are specific exclusions or waiting periods that might affect you.
• Claims Process: How easy or difficult is it to file a claim with the insurer? Check reviews and ask about the claims settlement process.

Tip: Keep notes of plans that seem most appealing based on your current needs, premium budget, and any features that catch your eye.

4. Have Clear Questions Ready

When you start the conversation with an insurance representative, be ready with specific questions to get the best top-up plan:

• What is the maximum coverage limit, and how does it work once my base policy’s limit is exhausted?
• What types of treatments or conditions does this top-up plan cover?
• What is the deductible? How much would I need to pay out of pocket before the plan kicks in?
• Are there any specific exclusions that I should be aware of in this top-up plan?
• Can I add this top-up plan to my existing policy, or do I need to buy it as a separate policy?
• Is there a waiting period, especially for pre-existing conditions or critical illness?
• Are there any benefits to adding family members to the plan?
• What is the process for filing a claim with the top-up plan?

Tip: Feel free to take notes or ask for written documentation on everything discussed, so you can compare different plans afterwards.

5. Discuss Your Budget

Be honest about what you’re willing to spend on premiums for the top-up plan. Since top-up policies are typically more affordable than full health insurance policies, it’s important to match a plan that offers the coverage you need without breaking your budget.

Tip: You can also ask about potential discounts or bundled deals if you’re looking to include your family in the top-up plan.

6. Consider Flexibility for the Future

Find out if the plan can be modified in the future if your needs change. For example:

• Can the coverage limit be increased?
• Can it be adjusted if you move to a different location or if your family dynamics change?
• Will premiums increase significantly after a certain age or after a claim?

7. Understand the Claim Process

The claims process can often be a pain point for many insurance holders. Be sure to:

• Ask how easy it is to claim benefits.
• Understand the paperwork required and whether it’s a reimbursement or cashless claim.
• Check if there are network hospitals where you can avail of cashless services.

8. Review the Policy and Terms

Once you narrow down your options, review the full policy terms before committing to anything. This includes:

• Any waiting periods or exclusions.
• The process for renewing the policy or making changes.
• Whether the plan aligns with your needs in the long term.

9. Ask for an Example Scenario

A good way to better understand how the top-up plan will work is by asking for an example scenario. For example:

• “If my base policy covers $5,000, and I need $8,000 for surgery, how much would the top-up plan pay?”
• “What happens if I need treatment for a condition not covered under the primary policy but covered under the top-up plan?”

This gives you a clearer picture of how the coverage will work in real-world situations.

By approaching the conversation with a clear understanding of your current policy, your medical needs, and the available top-up plans, you can make an informed decision. This helps you avoid surprises later on, ensures that you’re getting the right coverage, and prevents you from paying for unnecessary add-ons.

FAQ

What are top-up insurance plans?

Top-up insurance plans provide added coverage beyond the limits of your current health insurance, offering extra financial protection for individuals and families.

Why are top-up plans cheaper?

Top-up plans keep costs low and effective by including a deductible, covering only expenses above a set limit, which reduces the risk for insurers.

What can top-up cover insurance do in an emergency?

Top-up cover insurance can help cover costs that go beyond the limits of your primary health insurance in an emergency, preventing you from shouldering hefty hospital bills.

Can I buy a top-up insurance plan if I do not have a regular health policy?

No, a top-up plan requires an existing health insurance policy to cover initial expenses up to the deductible limit.

Who might need top-up cover insurance?

Expats, non-residents, and individuals with higher healthcare needs might require top-up cover insurance to supplement their existing coverage and meet their specific needs.

Why do some residents in Singapore feel under-protected when it comes to medical insurance?

Some residents in Singapore feel under-protected because employer-provided healthcare plans have low coverage limits and may not adequately cover all family members or significant medical expenses. This can lead to gaps in coverage and financial strain for individuals.

How can I choose the right deductible for my top-up insurance plan?

When choosing a deductible for your top-up insurance plan, consider balancing out-of-pocket costs with affordable premiums and your potential healthcare needs.

Do I still have to go through medical underwriting when purchasing a top-up policy?

Yes, just like a standard medical insurance policy, medical underwriting will still be required. Insurers can impose terms such as exclusions or loadings on your top-up policy for pre-existing conditions

How does the claim process work for top-up health insurance?

For claims exceeding the deductible, you first claim from your base health policy. If the bill exceeds the sum insured, you can claim the remaining amount from the top-up plan.

Can I keep my top-up insurance even if my situation changes?

Yes, you can maintain your top-up insurance and make necessary adjustments to the level of top-up required at each yearly renewal. However, note that when you decrease your top-up, meaning decreasing your deductible, medical underwriting will apply in most cases.

To find out more about your top-up plan options, contact us now!
https://asia.diot-siaci.com/

6401 9201 | info@asia.diot-siaci.com
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Written by Laurence Simon
Senior Relationship Manager – Private Clients