Restoration Benefit In Health Insurance: How It Works, Its Benefits and Demerits

Restoration benefits in health insurance ensure that your sum insured is replenished to its original amount, even after it has been claimed. Thus, it is essential to select a health insurance plan that provides 100 per cent restoration benefits so that your sum insured is fully restored in case it gets exhausted due to a claim.

This benefit is applicable in both individual and family health insurance plans. Often referred to as “refill benefit”, it can be added as an extra coverage to your current policy. It proves extremely beneficial in the event of a second hospitalisation within the same policy year. Essentially, it acts as a reliable backup plan during times of necessity.

HOW CAN YOU BENEFIT FROM SUM INSURED RESTORATION

The restoration benefit is particularly advantageous for families who are considering a family floater plan. With this type of health insurance, the same sum insured is shared among all the family members, thus making the restoration benefit crucial in case it gets exhausted in a claim.

For individuals seeking individual health insurance plans, having the restoration benefit for higher coverage can prove extremely beneficial. It will allow for covering recurring expenses related to an existing illness or accidents multiple times within a single policy year. This added feature will provide an extra layer of protection and financial security during times of medical need.

TYPES OF RESTORATION BENEFIT

Restoration benefit is classified into two main categories based on the level of exhaustion of the sum insured. They are as follows.

Complete Exhaustion: This type of restoration benefit comes into effect when the entire sum insured has been utilised. Most health insurance policies offer this benefit for complete exhaustion of the sum insured. For instance, if you have a health plan with a sum insured of Rs 5 lakh and you make a claim of Rs 4 lakh, the remaining sum insured will be Rs 1 lakh. In case of a second claim within the same policy year, the restoration benefit will not be applicable. Only when the remaining sum insured is also exhausted will the restoration benefit be activated, restoring your sum insured back to its full amount.

Partial Exhaustion: With this option, the restoration benefit will be triggered even when only a part of the sum insured has been used. This type of restoration benefit is more advantageous as it restores the sum insured for future claims. For instance, if you have a sum insured of Rs 5 lakh and make a claim of Rs 4 lakh, Rs 1 lakh will remain. Regardless of the claim made, the restoration benefit will take effect, restoring the sum insured back to Rs 5 lakh, thus making it accessible for any future claims.

HOW TO PURCHASE A RESTORATION BENEFIT PLAN?

When purchasing or renewing your health insurance policy, you have the option to select the restoration benefit. If it is available as an add-on cover, you can choose to include it for an additional premium. Prior to purchasing the policy, it is crucial to carefully examine the terms and conditions related to the restoration benefit.

Here are some of the key features you should consider before purchasing or renewing your restoration benefit.

Non-Carry Forward: The restored sum insured cannot be carried forward to the next policy year, even if it remains unused within the policy year when it was restored.

Complete Reinstatement: The total sum insured is reinstated even if it gets exhausted in a single claim within the policy term.

Application To Any Sum Insured: Restoration benefit applies to any given sum insured and not just the higher sum insured.

Not Applicable To First Claim: Restoration benefit is never applicable to the first claim made in a policy year.

Family Floater Advantage: It is a valuable benefit under a family floater plan, allowing family members to continue to avail of the coverage once the base cover is exhausted.

Single Person Benefit: Only one insured person at a time can avail of the restoration benefit.

MERITS AND DEMERITS OF BUYING A HEALTH INSURANCE PLAN WITH RESTORATION BENEFIT

The restoration benefit in a health insurance policy offers several advantages. These are as follows.

Additional Coverage: You get an extra sum insured within the same policy year, enhancing your coverage during medical emergencies.

Cost-Effective Coverage: Some plans come with in-built restoration benefits, offering extra coverage without additional premium payments.

Preparedness For Emergencies: Restoration benefit ensures you are adequately prepared for unforeseen medical expenses, thus ensuring you don’t face financial constraints during a health insurance claim.

Family Coverage: Family floater plans with restoration benefit cover all family members with sufficient sum insured.

While restoration benefits in health insurance plans can be advantageous, there are also some potential drawbacks to consider. Here are some of disadvantages of buying a health insurance plan with restoration benefit:

Increased Premiums: Health insurance plans with restoration benefits often come with higher premiums compared to standard plans without this feature. The additional cost may not be affordable for some individuals and families, especially for those on a tight budget.

Limited Restoration Frequency: Some health insurance policies may offer restoration benefits with limitations on the number of times the sum insured can be restored in a policy year. For instance, the restoration may be available only once during the policy term, which may not be sufficient for individuals with multiple medical needs.

Disease-Specific Restoration: Certain health insurance policies may only allow for the restoration of the sum insured for specific illnesses or medical conditions. This limitation may not be beneficial if you require coverage for a different medical condition in the future.

No Carry-Forward Of Restored Sum: In many cases, the restored sum insured cannot be carried forward to the next policy year. If you do not utilise the restored amount within the policy period, it will not be available for use in subsequent years.

Waiting Periods: Restoration benefits may be subject to waiting periods, meaning that you may have to wait for a specific period after purchasing the policy before being eligible to avail of the restoration benefit. During this waiting period, you won’t be able to utilise the restored sum insured.

Limited Coverage For High-Cost Treatments: Restoration benefits may not be sufficient to cover the entire cost of expensive medical treatments or surgeries, especially if the sum insured is relatively low.

Pre-Existing Conditions Exclusion: Some insurance providers may exclude coverage for pre-existing conditions under restoration benefits. This means that if you have a pre-existing condition, any expenses related to it may not be covered even if the sum insured is restored.

Separate Restoration For Family Members: In family floater plans, the restoration benefit is usually available for each family member individually. This means that if one family member exhausts their sum insured and the restoration benefit is activated for them, it won’t impact the sum insured of other family members.

FINAL WORD

It’s essential to carefully review the terms and conditions of the restoration benefit in any health insurance plan before making a decision. So, always consider your specific healthcare needs, budget, and the overall value of the restoration benefit in relation to the increased premium and potential limitations.