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

nism-series-xb-health-top-up-single-claim-deductible[ INVESTMENT ADVISER (LEVEL 2) ]

Dhruv holds a Base Health Policy of Rs. 3 Lakhs and a Top-Up Health Policy of Rs. 10 Lakhs with a Rs. 5 Lakhs per-claim deductible. During the year, he incurs an admissible hospitalization bill of Rs. 4 Lakhs in a single claim. How much must Dhruv pay out of his own pocket?

[ A ]NIL

[ B ]Rs. 1 Lakh[ CORRECT ]

[ C ]Rs. 2 Lakhs

[ D ]Rs. 3 Lakhs

Takeaway

Since the Rs. 4 Lakh claim does not exceed the Top-Up policy's Rs. 5 Lakh per-claim deductible, only the Base Policy pays, leaving Dhruv to pay Rs. 1 Lakh out of pocket, so option B is correct.

Derivation

The Base Policy pays its full sum insured of Rs. 3 Lakhs toward the Rs. 4 Lakh bill. The Top-Up Policy only activates once a single claim exceeds its Rs. 5 Lakh deductible threshold; since this claim is only Rs. 4 Lakhs, the Top-Up pays nothing. Out-of-pocket expense = Rs. 4 Lakhs - Rs. 3 Lakhs (Base) - Rs. 0 (Top-Up) = Rs. 1 Lakh. This tests the defining mechanic of a standard (non-super) Top-Up policy: the deductible is applied per individual claim, not in aggregate, so a claim that falls between the base sum insured and the deductible threshold leaves a genuine coverage gap.

Why the others fail

A — NIL

Assumes the Top-Up policy pays the balance regardless, ignoring that this single claim did not breach the Rs. 5 Lakhs per-claim deductible threshold.

C — Rs. 2 Lakhs

Assumes the Base Policy paid only Rs. 2 Lakhs of the Rs. 4 Lakh claim, when in fact it pays its full Rs. 3 Lakh sum insured before any shortfall arises.

D — Rs. 3 Lakhs

Assumes the Base Policy rejected the entire Rs. 4 Lakh claim outright, when in fact it pays its full Rs. 3 Lakh sum insured toward the bill.