Q. I am 23. I earn ₹25,000 per month and I pay around ₹18,000 towards my education loan amount of ₹1,85,000 at an interest of 8.5%. Please let me know how to maximise the value of the amount I spend. I also request guidance on investing in debt funds.

Bharath Kumar

A. We are not quite sure what you mean by maximising the value of the amount you spend. So we have to skip that. Since you have to finish repaying your education loan, you can use only the balance to invest in mutual funds. Consider ultra-short and short-duration funds to begin with as they will be less volatile. Later, once your loan is is fully repaid, see if you can handle some risk with equity index funds.

Q. I am employed in a private IT firm. I used the group health insurance offered by them for making a claim for my father who is hospitalised. Since I used the insurance amount, am I legally bound to stay with the firm as I am planning to quit soon?


Nitya Kalyani answers: No. Making a claim on an employer’s group insurance policy does not oblige you to continue with the employer. You have already paid your dues for this benefit by way of premium for the coverage which could have either been directly or partially paid by you or opaque to you, being part of your remuneration package.

Good luck on your future career plans. If you are joining a new place of employment and will be joining the group insurance scheme there, you should get a letter from your old employer detailing the length of coverage and the claims made so that you get good terms on the new policy.

If you are going to start a venture on your own or are breaking from work in order to study, then getting an independent hospitalisation policy for yourself and your family members becomes more important. The letter from your old employer regarding your health insurance track record will come in handy here as well. In either case, do try to move from one scheme to the other without a break so that you have the advantage of unbroken coverage.

Q. For a query related to health insurance coverage, you had suggested to supplement our coverage at some point with a top-up policy.

I request you to clarify the following:

a. A super top-up policy can be taken only if one takes a base policy. It is observed that the premium payable for a super top-up policy is far less than the base policy’s. Why is it so?

b. Is there any difference with regard to claim settlements between the base policy and the super top-up policy?

For example, suppose one has a base policy for ₹3 lakh and a super top-up policy for ₹4 lakh. The super top-up policy triggers after exhausting the claim limit under the base policy. If a claim is made for a sum of ₹6 lakh, ₹3 lakh is settled from the base policy and the balance with the super top-up policy. In settling the claim, is the yardstick followed by health insurers in processing the claim the same? As I am a retired bank officer, this is the time for me to decide on health insurance.


A. It is great to see this level of due diligence and interest in information about insurance and it points to an increasing awareness about both insurance and the imperatives of healthcare costs.

Why is a top-up policy cheaper per rupee of coverage compared to a basic hospitalisation policy? Taking your own illustration, a hospitalisation is more likely to use up a base policy sum assured of ₹3 lakh and making that claim is a certainty. That sum assured (SA) will be the ‘threshold’ (also called ‘excess’ or ‘deductible’) and expenses over and above this are less likely and will become payable only after the base policy SA is exhausted by way of claim. The likelihood of that larger claim amount determines the premium rate, among other things.

You have to also check the nature of the top-up policy. Some specify the threshold per hospitalisation (or per event or per claim as they term it) and others specify the threshold per policy year. There are policies that combine the two scenarios as well. The names of the policies also vary from top-up to super top-up and the usage is not standard across companies.

With regard to your second question as to how the claims are settled, the principles are the same. They will be settled within the policy framework and against actual expenses, read bills and other documentation, except where cash benefits like hospital cash or disability benefits are part of the policy. The top-up policy will make a claim payment after verifying that the deductible has been exhausted thus triggering the top-up policy.

As per your example, if you have expenses that need to be claimed under both policies, you can make the basic policy claim with proper support and claim the rest from the top-up with the bills and documents for the additional amount referring to the basic policy and its claim documents for supporting it. Or you can make both claims simultaneously, simpler if you have both the policies with the same insurer.

If you are able to avail cashless service, these processes are easier as the third-party administrator will deal with the formalities.

(Vidya Bala is co-founder, Nitya Kalyani is a business journalist specialising in insurance & corporate history)

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Printable version | Sep 8, 2022 12:16:11 am |