Generally your health insurance policy allows you to utilize only sum insured limit in a policy year. Once the cover is exhausted, you can’t file for any more claims. However, on renewal the following year, the entire sum insured is available to you again.

Insurers are now introducing products that recharge the sum insured if you happen to exhaust it within the policy year.

How recharge plans function

Recharge or restore health insurance plans are typical health insurance policies that pay for your hospitalization including pre and post-hospitalization days. An extra feature is that after you reach the original sum insured limit, the plan restores the same sum insured for future hospitalization the same year. For example, suppose a policyholder buys a health insurance policy with the restore option with Rs.2 lakh of sum insured and a policy term of a year. She gets hospitalized and needs to pay a bill of Rs.2 lakh. The policy will help her do so and, at the same time, recharge the policy with another Rs.2 lakh. If there is another hospitalization the same year, the policyholder gets a cushion of Rs.2 lakh. Next year, when your policy is up for renewal, the recharged amount will go away and your policy will start with the original sum insured of Rs 2 lakh. 

Beware of

This extra recharge comes with certain conditions. To start with, plans will not support this recharge limit for the same illness or injury for which the policyholder filed a claim previously. In the example above, say, the policyholder made a claim due to a heart problem and exhausted the cover. If the heart condition requires consequent hospitalization, the recharged policy will not come into play.

Also, in some plans the restore option will become applicable only when the entire sum insured limit is exhausted. So, if the sum insured in an individual policy is Rs.4 lakh, and the hospitalization bill is Rs.4 lakh in the first incident and Rs.4 lakh in the second, you will have to pay Rs.3 lakh from your pocket for the second incident of hospitalization. But for any consequent hospitalization, the policy will star functioning.

What needs to be done?

The concept works well, but given the above stated condition, you need to be certain that even under the restore option, you have a good level of cover. Recharge plans work fine in case you have a floater policy. A floater policy covers the entire family as one unit so if the cover is used by one member, the insurance cover gets lessened by that much amount for rest of the members in a policy year. But under the restore option, the sum insured would get recovered and other members of the family will be able to use the cover.

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