Don’t fall for the Top-Up trap for Health Insurance


The reason you need to buy additional Mediclaim cover is medical inflation.

In case you are already covered by your employer, but are looking for additional cover, What are your options in such cases? One way to get additional cover could be to buy another health insurance policy. But this may be too expensive. There are other options, for instance, one can buy a top-up plan which would provide an additional cover to add to your existing cover in a an economical way. But if you buy them based only on the insurance company’s recommendations or the agent’s, you will end up making a mistake.  

Take a look at this recent case which was reported on the Moneylife Foundation’s Insurance Helpline. “I have a Health Insurance policy from ICICI Lombard. In September, 2013, I got a call for a limited period offer for a top up plan. They rushed it to be completed by 21st September. I bought the top-up for Rs5871 for a cover of Rs8 lakh. Now, when I need to renew my original policy (mediclaim), the premium rate has gone up to Rs11,225, a steep hike of 38% over the original premium. The reason given is October 2013 regulatory changes. Had I known this, I would not have overshot my budget and not taken a top up plan.” First, the person is surely not a Moneylife reader. We do not recommend buying top-up plans. Second, it was  the customer’s mistake to fall for a “limited time” offer. The insurance company sales force was pushing a product to meet its targets under the guise of this offer. Its is an old trick which always works. Anyway, after Moneylife Foundation’s intervention, ICICI Lombard was willing to make an exception in this case and refunded the full premium of Rs5871 even though the top-up had already completed six months. What is the learning from this? The difference between super top-up and top-up is that, in the case of a top-up policy, the expenses for a single treatment should be over the threshold, whereas in a super top-up the total expenses in a year must be above the threshold level for the policy to be useful.

Thus, between a top-up and super top-up, the latter is more beneficial for customers. There are several top-up policies in the market, but they are not worthwhile. There is rampant mis-selling, and as customers are not aware of the difference between super top-ups and top-ups, they usually end up being sold the top-up. We suggest that you never buy a top-up policy. Examples of top-up products that you should avoid are, United India Insurance (Top-up medicare), Bajaj Allianz (Extra Care), Apollo Munich (Optima Plus), ICICI Lombard (Health Care Plus) and Star Health (Super Surplus).