Understanding Restoration Benefit In Health Insurance

When buying health insurance, usually, people tend to overlook the features of the insurance policy. They don’t read the policy brochure properly. Thus, they miss out on the benefits being provided by the insurer and the terms and conditions associated with those benefits. In health insurance, one such feature is restoration benefit. A restoration benefit is a feature wherein the insurer restores the original sum insured after it gets fully exhausted for the treatment of illness. This is how a restoration benefit works. A restoration benefit option comes as an inbuilt feature in almost every comprehensive health insurance plan. 

Let’s take an example. Mr. Rahul Sharma had a Rs 5 lacs cover health insurance. He had to undergo heart surgery which cost Rs 5 lacs and his entire sum insured was exhausted. After three months, he got infected with dengue and the treatment cost Rs 70,000. The insurer will restore the original sum insured of Rahul’s health insurance policy and his treatment for Dengue will be covered. 

A restoration benefit is a significant feature because it acts as a back-up when the need arises. It is especially useful in a family floater plan because if one of the individuals has used the entire sum insured on his illness, another family member will be able to use it again within the same year. It may be noted that the restored sum insured can not be carried forwarded to the next policy year. The sum insured restored in a policy year will be restricted to that specific policy year only.  
 

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Types of restoration 
There are two types of restoration available:
1. Complete exhaustion of sum insured: Most health insurance plans provide the option of restoring the sum insured on its complete exhaustion. To take an example, Rahul Sharma has a health insurance policy of Rs 5 lacs sum insured. Suppose, he files the first claim for Rs 4.5 lacs. In the same year, he filed a second claim of Rs 2 lacs for any unrelated illness. If his health plan says it will activate restoration benefit on complete exhaustion of sum insured, then he will be covered for Rs 50,000 on his second claim from his health insurance plan (the amount left in the kitty after the first claim) but his restoration benefit won’t be activated. It will be activated only from the third claim since his sum insured was not entirely exhausted when the second claim occurred. 

2. Partial exhaustion of the sum insured: There are a few health insurance plans which provide restoration on partial exhaustion of the sum insured too. If Rahul’s health plan says it will activate restoration benefit even on partial exhaustion of sum insured, then, in that case, the second claim (wherein he still has Rs 50,000 in the kitty) will trigger the restoration benefit and the insurer will pay the claim. In this type of restoration benefit, the insurer doesn’t wait for complete exhaustion of the sum insured. HDFC Ergo Health Optima Restore and HDFC Health Suraksha Silver Smart plan provide restoration benefit on partial utilization of your existing policy.

Restoration benefit may work only on different illnesses 
In some health insurance plans, the restoration benefit will work only on different illnesses and not on the same illness for which the policyholder filed the first claim. For example, in the example quoted initially, Mr. Rahul Sharma filed a claim for his heart surgery and exhausted the cover. His cover was reinstated when he filed a second claim for dengue. However, if Mr. Rahul Sharma had to be hospitalized consequently for his heart ailment, his sum insured would not have restored and he would have to shell out money from his own pocket.

There are a few health insurance plans which offer restoration benefits on the same illness also. For example, Care Advantage plan which has a sum insured of Rs 1 crore provides instant addition of 100% sum insured on the utilization of sum insured which can be used again for the same illness. 

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Quantum of restoration benefit
Most health insurance plans offer restoration benefits of up to 100% sum insured. But there are a few plans which offer a higher restoration benefit too. For example, in the Aditya Birla Activ Assure Diamond plan, if your sum insured gets exhausted, the insurer will reload your sum insured amount by another 150% on a non-related illness.  

Impact on premium
You may note that since restoration benefit is a feature, it may have a slight impact on your premium. Your premium can slightly increase. “Restoration is a good value-added feature in a health insurance plan. It best serves the purpose in the case of a family floater policy. If one person has used the sum insured for his treatment and the other person also has to use the sum insured for his treatment, restoration benefit comes at a rescue,” said Amit Chhabra, Head, Health Insurance, Policybazaar.

“However, one should never bank on restoration benefits for your family’s health alone. Whosoever buys the policy, should understand the terms and conditions of restoration benefit. While restoration is a great feature, it doesn’t undermine the need to buy a higher sum insured,” he added. 

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