What is a Health Insurance Restoration Benefit?
Pragathi Reddy had bought a health insurance policy of Rs 4 lakhs with restoration benefit as soon as she started working with an IT company. However, when she was diagnosed with appendicitis and had to undergo immediate surgery, the entire sum assured of Rs 4 lakh got exhausted after covering the pre and post-hospitalization expenses. A few months later, Pragathi got infected with covid19 which cost her almost 2 lakhs for treatment in the hospital. Just because her health plan had a restoration benefit, the original sum assured was restored, helping her overcome the tough times without incurring any financial burden.
Restoration benefit in health insurance is a facility extended by the health insurer wherein the insurance company restores the original sum assured to the policyholder’s base policy after the original sum assured gets fully exhausted for the treatment of an unrelated illness.
It means that even if you use up the entire sum assured, there is no need to worry about losing your health benefits, as those benefits are restored, which you may use in the future for the treatment of an unrelated illness.
The need for restoration benefit: Purchasing a health insurance policy with restoration benefit makes a lot of sense and is also the right choice, as having a plan B is always a good idea, particularly when it comes to your health. A restoration benefit is a very good fallback option that comes in handy if the need arises.
For example, let’s say that you have taken a family floater plan that covers all your family members. When one person in the family uses up all the coverage, other members lose out on coverage value if anyone else gets sick in the same year. But with restoration benefits in place, you need not worry about this scenario. To get the most out of your family floater coverage, it is recommended to add this additional benefit as it offers real value to your policy.
Premium cost: The premium of a health insurance policy with restoration benefit costs higher than policies without this benefit. But talking in terms of the restoration benefit, the cost is not high and can be called economically advantageous. For example, if a Rs 2 lakh insurance plan costs Rs. 6000 as a premium for a year; for a 34-year-old person, it is going to cost Rs. 7000 as a premium per year for a plan with restoration benefit.
But this provision would benefit you if another member of your family also gets hospitalized within the same insurance year, assuring you of restoration of the sum insured.
Important terms and conditions to remember: Before moving to buy a health insurance policy with restoration benefit, you must understand the terms and conditions associated with the product:
Suitable for a wide range of unrelated ailments: Most health insurance policies that provide a restored benefit require that the following claim must be for an unrelated disease for the benefit to be granted. There should be no connection between the second claim and the first claim. If this is the case, the restoration function will not be applicable.
Suppose a policyholder spent the whole cover amount on angioplasty. If the policyholder files another claim in the same plan, it should not be linked to issues related to the angioplasty procedure itself. For the restoration benefit to kick in, the second claim must be for an unrelated sickness. However, certain insurance policies provide for the restoration of associated claims. You should, therefore, review the policy wordings.
The assured benefit must be used in whole: Most plans provide a restoration option if the insured amount is completely depleted. However, the “restore” function would not apply to the second claim unless the policy’s total insured is exhausted.
What if your insurance policy covers Rs 10 lakhs and your first claim costs Rs 7 lakhs? The restoration benefit would not apply to the second claim of Rs. 2 lakh since there are Rs 3 lakhs left. If the second claim is for Rs 4 lakhs, the restoration benefit would be available.
The quantity of restoration: Most insurance policies enable 100% of the insured amount to be returned in the event of a claim. Some plans limit this proportion to 50%, while others allow up to a maximum of 200 percent restoration. In certain cases, you may be able to increase the amount of compensation you get via an add-on.
Cannot carry forward unutilized benefits: The restoration of benefits cannot be carried forward to the next year. Whatever benefits earned this year will cease to exist after exhaustion of your existing limit in the same year itself.
In terms of Restoration Benefit, there are a few things to bear in mind. The important point is that only after the full coverage has been exhausted, the restoration Benefit shall become accessible. So until the base coverage is fully utilized, the restoration benefit cannot be used for any reason. Only after the first claim has consumed the entire cover in the policy year, restoration benefit is it accessible for future claims. Unused restoration benefits can’t be carried over to the following year. In many plans, the benefit is embedded into the coverage structure.
Most insurance policies allow for a one-time reinstatement of coverage within the policy year. Allowing limitless restoration is not generally practiced, but some insurers offer this as well, which you may consult with the respective insurance companies and then make a decision.
The health insurance policy restoration is a value-added benefit offered by the insurer to policyholders. While some insurers offer this as a standard package, some others don’t. We suggest you contact the respective health insurer and understand the terms and check for features when purchasing health insurance to maximize your coverage and reduce your out-of-pocket costs in times of medical emergencies to yourself or your beloved family members.