Archive / Investment Adviser (Level 2) / Non-Life Insurance Products

nism-series-xb-health-top-up-multiple-claims-out-of-pocket[ INVESTMENT ADVISER (LEVEL 2) ]

Esther has a Base Health Policy of Rs. 3 Lakhs and a Top-Up Policy of Rs. 10 Lakhs with a Rs. 5 Lakhs deductible per claim. During the year, she incurs three separate medical claims: Claim 1 = Rs. 2 Lakhs, Claim 2 = Rs. 3 Lakhs, and Claim 3 = Rs. 4 Lakhs. What is the total out-of-pocket expense Esther must bear?

[ A ]Rs. 6 Lakhs[ CORRECT ]

[ B ]Rs. 1 Lakh

[ C ]Rs. 3 Lakhs

[ D ]NIL

Takeaway

Because none of Esther's three separate claims individually exceeds the Rs. 5 Lakh per-claim Top-Up deductible, the Top-Up pays nothing on any claim, leaving Rs. 6 Lakhs total out-of-pocket, so option A is correct.

Derivation

Claim 1 (Rs. 2L): Base pays Rs. 2L, leaving Rs. 1L of base limit; Top-up pays 0; out-of-pocket = 0. Claim 2 (Rs. 3L): Base pays its remaining Rs. 1L then is exhausted; Top-up pays 0 since Rs. 3L < Rs. 5L deductible; out-of-pocket = Rs. 2L. Claim 3 (Rs. 4L): Base pays 0 (exhausted); Top-up pays 0 since Rs. 4L < Rs. 5L deductible; out-of-pocket = Rs. 4L. Total out-of-pocket = Rs. 2L + Rs. 4L = Rs. 6 Lakhs. This tests the same per-claim deductible mechanic as the single-claim case, but scaled across multiple hospitalizations, exposing how a standard Top-Up can leave a large uncovered gap even when the base plus top-up sum insured comfortably exceeds total billed costs.

Why the others fail

B — Rs. 1 Lakh

Assumes the Top-Up behaves like a Super Top-Up and pays out against the aggregate of all claims, when a standard Top-Up applies its deductible separately to each individual claim.

C — Rs. 3 Lakhs

This is the total amount paid by the Base policy across all three claims, not the amount Esther herself must bear out of pocket.

D — NIL

Assumes all three claims are fully reimbursed, which ignores that the per-claim deductible structure leaves Claims 2 and 3 largely unpaid.