How to Get the Most of Restoration Benefit in Health Insurance?

September 17, 2021 Mutual Fund

Have you ever considered a rare possibility of second medical emergency during a policy year? Unfortunately, it can be challenging to arrange funds for medical emergency after you have exhausted your sum insured during a policy year. In such cases, people generally either break their savings or opt for a personal loan, which creates additional financial stress on them. However, by opting for Restoration Benefit while buying a health insurance policy will keep all the stress at bay.

What is Restoration Benefit in health insurance?

The Restoration Benefit is an add-on feature that can be bought with a comprehensive health insurance policy for a nominal increase in the premium. With the purchase of this add-on, an insurance company restores the sum insured after the original sum insured gets exhausted. This restored sum insured can be used for the next medical emergency. Hence, the insured do not have to worry about exhausting the sum insured.

What are the features of Restoration Benefit in health insurance?

• Restoration benefit is an add-on that an insured needs to purchase separately at the time of buying a health insurance policy.

• The add-on is offered by most insurance companies for a nominal increase in the premium.

• It is available only for comprehensive health insurance policies.

• The refilled sum insured can be used for unrelated diseases¹. Some insurance companies offer to use it for related diseases² as well. However, they usually charge an extra premium and comes with a waiting period of 30 to 45 days.

• Restoration comes into the picture when the sum insured gets completely or partially exhausted.

• The sum insured is restored for future claims. Hence, one cannot use it for the first claim if the claim amount is higher than the original sum insured.

• If the restored sum insured is unused during the policy period, one cannot carry forward it to the next year.

• There is no minimum sum insured required to buy this add-on. It can be purchased with any amount of sum insured.

• More than one person cannot use the restored sum insured at the same time.

• Some insurance companies offer unlimited restoration of the sum insured, but the premium is higher than usual for such benefit.

• Some insurance companies provide built-in restoration benefit with a family floater health insurance policy without having to pay any extra amount.

What are the types of Restoration Benefit?

Insurance companies offer two types of Restoration Benefit.

1. Complete Exhaustion:

In this type of restoration, the sum insured is restored only after the entire original sum insured is exhausted. This is the most common type of restoration that most insurance companies provide.

For example, say your total sum insured is Rs 4 Lakhs, out of which 2 Lakhs is already utilised. You have to undergo a treatment that costs Rs 3 Lakhs. In this case, the insurance company can only pay the remaining sum insured of Rs 2 Lakhs, and you will have to pay 1 Lakh by yourself. After the settlement of this claim, the insurer will refill the sum insured, which can be used for your subsequent claims. Since it is a Complete Exhaustion Restoration, the insurance company does not refill the sum insured unless it is fully utilised.

2. Partial Exhaustion:

The partial exhaustion restoration benefit offers to refill the sum insured as and when it is utilised. It is beneficial for the insured since the sum insured gets restored even if it is partially used.

So, in the above example, you would not have to pay any money from your pocket, if it was a partial exhaustion restoration benefit. Because the initially used sum insured of Rs 2 Lakhs would have been restored, and you would again have a sum insured of Rs 4 Lakhs.

How beneficial it is for an Individual Health Insurance Policy?

In the case of an Individual Health Insurance Policy, the sum insured gets restored once the original sum insured is exhausted. Some insurance companies will let you use the refilled sum insured with a waiting period of 30 to 45 days if the claim is for the related disease, whereas others let you use the refilled sum insured for your next unrelated diseases only. In the latter case, you cannot claim for the same illness with the refilled sum insured.

For example, say Ms Ankita has a health insurance policy with restoration benefit. She was diagnosed with cancer in the fourth month of the policy period. Her health insurance coverage was Rs 4 Lakhs, whereas the total cost of her treatment amounted to Rs 5 Lakhs. Ms Ankita used her entire sum insured, and she had to pay the remaining Rs 1 Lakh out of her own pocket.

Now, after three months, Ms Ankita has got a heart attack and has to undergo heart surgery that will cost her Rs 3 Lakhs. As she had opted for a restoration benefit at the time of purchasing a policy, her sum insured of Rs 4 Lakhs was restored after she had exhausted it in the first claim. Therefore, she can now use her refilled sum insured to claim for her heart surgery. However, instead of a heart attack, if she again has to undergo some cancer related treatment, she will not be allowed to use the restored sum insured for it.

How beneficial it is for a Family Floater Health Insurance Policy?

Restoration benefit can help you make the most of your Family Floater Health Insurance Policy. If one family member has utilised the entire sum insured of your policy, the restoration comes in handy to cover other members of the family. It ensures that the insured members have enough coverage throughout the policy period.

Let’s understand it better with an example:

Suppose Mr Rahul has a family floater policy under which his wife and two children are covered along with him. His younger child needed to undergo a treatment that exhausted the entire sum insured of Rs 10 Lakhs. The sum insured was refilled by the insurance company since Mr Rahul had purchased the restoration benefit add-on. Now, if the same child requires medical treatment for an unrelated illness or any other family member requires medical treatment for any disease, it will be covered with a restored sum insured.

How does it benefit in case of an accident?

Many insurance companies provide unlimited restoration benefit with a family floater health insurance policy in case of an accident. For example, Ms Sasha has a family floater health insurance policy with a coverage of Rs 5 Lakhs, and she has purchased a restoration benefit add-on along with the policy. Her entire family, of four members, meet with an accident. The restoration benefit will trigger here, and each insured family member will get a sum insured of Rs 5 Lakhs. So, Ms Sasha gets a total restoration benefit of Rs 20 Lakhs.

¹ Unrelated diseases are those diseases/illnesses that are not claimed in the policy year previously.

² Related diseases are those diseases/illnesses previously claimed in the policy year.

To Conclude:

The restoration benefit is one of the most useful and affordable add-ons you can consider purchasing. It ensures you and your family do not run out of sum insured at any point during the policy year. Therefore, it is advisable to get a restoration benefit, possibly the partial exhaustion type of restoration benefit, along with your family health insurance plan, since you can get the most of this add-on with a family plan. Moreover, make sure you make an informed decision by reading the policy terms as each insurance company offers slightly different features.

This article first appeared on PersonalFN here