Exhausted your health insurance sum insured? Replenish it with the restoration benefit

The second wave of COVID-19 in India is slowing down, but the nightmare is still not over yet. Of the fortunate ones who survived the infection, many started showing signs of post-COVID complications. Common neurological problems such as fatigue, brain fogging, and stroke were seen in many people. To add to this series of unfortunate incidents, the threat of a third wave has already started emerging.

Owing to this, it seems as though people have become more cautious of the importance of having health cover to protect themselves and their families. But, considering the rising healthcare costs and multiple hospitalizations due to COVID-19, it is quite possible that the entire sum insured gets exhausted in a single hospitalization. This is when 'restore benefit' in a health insurance feature comes in. Restoration benefit provides you with additional coverage in case you use up your existing cover in any given policy year. This is an in-built feature available in almost every comprehensive medical plan.

How does it work?

The restoration benefit, as the name suggests, restores the entire sum-insured after the initial sum insured is completely or partially exhausted in the same policy year. For instance, let’s say Rajesh buys a family floater plan with a cover of Rs 5 lakh for his family of four. He undergoes an open-heart surgery which consumes his whole sum insured. After two months, his daughter also gets hospitalized for another ailment that resulted in a medical expense of Rs 3 lakh. Now, here, the restoration benefit comes into action. It automatically reinstates the full amount of sum insured on exhaustion of his cover. Thus, the restored benefit works as a magical backup as the entire sum insured is replenished for the policyholders, keeping them financially protected at all times.

There are two types of restoration options and are categorized according to the consumption of sum insured. Under complete utilization of the cover, the benefit comes into play when the entire sum insured is exhausted. Some companies, however, offer restoration benefits on partial consumption of the sum insured. The benefit comes into play even if the sum insured is partially exhausted.

Who should opt for a restoration benefit?

The restoration plan is best-suited for people with Family Floater policies. This plan is shared among family members. In such plans, this feature ensures that all the members of the family are adequately covered by the insured sum. For instance, if one of the family members uses up the whole coverage, the restored sum insured will guarantee that the policy covers the medical costs of other family members.

Also, people who cannot afford higher sum insured policies must look for restoration benefit in their health insurance plans. This feature will help you reduce your out of pocket expenses in case of an emergency.

Keep in mind the following conditions related to restoration benefit

Restoration benefit is available only for different illnesses

To put simply, under some policies, if you use the sum insured for a specific disease such as heart attack, you cannot use the replenished sum insured for the same problem again within the same policy term. The restored sum insured can still be used by other members for the same disease. However, some policies cover even the same illness as they provide the option of reinstatement of sum insured for treatment of the same ailment during a policy year.

It works on a tenure basis

One can use the restored benefit only once in a policy year and unlike the no-claim bonus, it cannot be carried forward for the subsequent policy year, even if you did not use it in the same policy year of restoration.

Not available for the first claim

One important factor that needs attention is that the restoration benefit can only be used for future claims. So, one cannot avail this benefit on the very first claim of the policy year.

For Instance, if your hospitalisation bill comes to Rs 6 lakh and your current health cover is Rs 5 lakh, considering that it’s your first claim you’ll be reimbursed for your health cover amount only and the difference would be at your expense. However, if you make any subsequent claim in the same policy year, your sum-insured will be reinstated for that.
 

(AMIT CHHABRA is Head- Health & Travel Insurance, Policybazaar.com)