Restoration Benefit in Health Insurance

Health insurance is one of the essential benefits offered by your company. You're covered for hospitalisation, but did you know about restoration benefits in health insurance?

It's a useful feature that can provide extra coverage when you need it the most. In this article, we'll explain the restoration benefit and its importance.

You may like reading about our Group Health Insurance Policy.

What is Restoration Benefit in Health Insurance?

'Restoration benefit' is a feature of health insurance that restores the sum insured after it's exhausted during the policy period. In other words, it provides additional coverage when the original sum insured is insufficient to cover the medical expenses. The restored sum insured is only available for future claims, not for the same illness that had exhausted the original sum insured.

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Types of Restoration Benefit in Health Insurance

Once you decide to incorporate the restoration benefit into your plan, you can select from the following categories based on your needs or preferences.

Complete Exhaustion

As the term implies, the insurer will restore the sum insured to 100% when you fully exhaust the sum insured of your health insurance policy.

For example, let's say a claim of Rs 3 lakh is made on a health insurance policy with a sum insured of Rs 4 lakh. After the claim payment, the remaining sum insured will be Rs 1 lakh. If a second claim is made within the same policy year, the restoration benefit will not come into effect. Only when the remaining sum insured is also exhausted, the restoration benefit will get activated and your sum insured will be fully restored.

Partial Exhaustion

Under partial exhaustion restoration benefit, your health insurance company will restore the basic sum insured to 100% when you partially exhaust the sum insured amount.

For example, If you have a sum insured of Rs 5 lakh and have made a claim of Rs 4 lakh, Rs 1 lakh would be left. Nonetheless, the restoration benefit would apply and the sum insured would be restored to Rs 5 lakh, which will be available for any future claims.

Who is the Restoration Benefit Best Suited For?

While the restoration benefit is not a compulsory feature, it can be particularly beneficial for certain individuals with specific types of health insurance policies. The following groups may find the restoration benefit especially useful:

1. Policyholders with a Family-floater Health Insurance plan might want to consider the restoration benefit, as the insured sum will be shared among multiple family members.

2. Policyholders with a lower insured sum might find this benefit valuable as a safety net in the event of total depletion, helping to minimize out-of-pocket expenses. Given the rising medical costs and the ongoing pandemic, this benefit could provide crucial support in times of need.

How Does Sum Insured Restoration Benefit You?

The restoration benefit is an excellent option for families choosing the family floater plan. This is due to the fact that the same insured sum is shared among all the insured family members under the family floater health insurance plan.

If you're considering an individual health insurance plan, having a restoration benefit for increased coverage allows you to claim for an existing illness and/or accident multiple times within a policy year.

How to Purchase a Restoration Benefit Plan?

The restoration benefit can be selected when purchasing or renewing your health insurance policy. If offered as an additional cover, it will come at an extra premium. However, there are several conditions tied to the restoration benefit that you should review when buying the policy. Here are some key features to consider:

Understand the Terms Related to the Restoration Benefit

1. The restored sum insured cannot be rolled over to the next policy year if it remains unused in the year it was restored.
2. The total sum insured is replenished even if it's exhausted in a single claim within the policy term.
3. The restoration benefit applies to any sum insured, not just the higher sums.
4. Restoration benefits are only applicable to future claims and do not apply to the first claim made in a policy year.
5. This benefit is particularly valuable under a family floater plan. Once the base cover is exhausted, your family members can continue to use the coverage.
6. The restoration benefit can only be used by one person at a time.

Plan for Potential Future Medical Emergencies

1. To maximize coverage at a low premium, consider adding the restoration benefit to your health insurance policy. While some health insurance plans include restoration benefits, others may require you to purchase it as an additional cover. Buying it as an add-on will slightly increase your premium, depending on the policy term, plan type, etc.
2. Your restoration benefit will be activated for an unrelated medical condition. For two family members, the trigger point of the disease must occur at different times.
3. Some health insurance policies might cover the same illnesses multiple times in a policy year, while others only allow the restored sum insured to be used by other members for the same disease.
4. A few companies may offer to restore the sum insured after a gap of 30-45 days in the case of the same illness, which may require an additional premium.
5. Some insurers offer unlimited restoration of the sum insured within a policy year.

How Does Restoration Benefit Work?

Let's say you have a health insurance policy with a sum insured of Rs. 5 lakhs and a restoration benefit of Rs. 5 lakhs. You're hospitalised, and your medical expenses amount to Rs. 6 lakhs. Your policy will cover the first Rs. 5 lakhs, and the restoration benefit will kick in to cover the remaining Rs. 1 lakh.

Let's assume you need to be hospitalised again for a different illness, and your medical expenses are Rs. 4 lakhs. You can use the restored sum insured of Rs. 5 lakhs to cover the expenses.

Why is Restoration Benefit Important in Health Insurance?

Restoration benefits can be helpful in situations where the sum insured is exhausted, and you need additional coverage. With the rising cost of healthcare, you need to ensure adequate coverage to avoid financial strain during a medical emergency.

Restoration benefit provides that extra coverage cushion and ensures you don't have to dip into your savings or borrow money to pay for medical expenses.

Advantages of Buying a Health Insurance Plan with Restoration Benefit

1. You have the advantage of an extra sum insured under your policy within the same policy year.
2. For health insurance plans with integrated restoration benefits, you can enjoy additional coverage without paying an extra premium.
3. With a restoration benefit, you're well-prepared for any medical emergencies, ensuring you never lack the necessary funds to meet a health insurance claim.
4. Restoration benefits in family floater plans provide adequate sum insured for all family members.

Conclusion

Restoration benefit is an important feature of medical coverage that provides additional coverage when the sum insured is exhausted. Knowing you have extra coverage if needed can provide peace of mind during a medical emergency.

As you choose a health insurance policy, make sure to consider restoration benefits as a useful feature.

FAQ

Q. How do insurance companies determine if a claim qualifies for the restoration benefit, especially in cases of partial exhaustion?‍

A. Insurance companies review the claim details against the policy's terms. For partial exhaustion, they check if the claim amount has reduced the sum insured significantly and if the policy conditions for restoration are met. This ensures fairness in applying the benefit.

Q. Can the restoration benefit be applied to pre-existing conditions covered under the policy, or are there limitations?‍

A. The application of the restoration benefit to pre-existing conditions depends on the policy's terms. While some insurers may allow it, others might exclude pre-existing conditions from this benefit. Policyholders should review their policy documents or consult with their insurer for clarity.

Q. Is there an option to increase the restoration benefit amount during the policy renewal process, and if so, how does it affect the premium?‍

A. Increasing the restoration benefit amount at renewal is possible with some insurers. This usually leads to an increase in the premium. Policyholders should discuss this option with their insurer to understand the impact on their premium and the additional coverage benefits.