Restoration Benefit in Health Insurance

Health insurance has become a crucial part of financial planning for individuals in today’s world. It assists people during any unpredictable medical crisis without worrying about the financial burden. However, despite having a health insurance policy, individuals may still face the issue of exhausting their sum insured due to unforeseen medical expenses. That is where the restoration benefit in health insurance meaning comes into play. 

What is restoration benefit in health insurance?

Restoration benefit is an add-on feature in health insurance policies that provides an additional sum insured amount after the primary sum insured is exhausted in a policy year. This feature may be handy for policyholders likely to use their original sum insured due to recurring illnesses or hospitalisations.

For instance, the policyholder has a sum insured of Rs 5,00,000 and has utilised the entire amount in a policy year. The restoration benefit will automatically restore the sum insured amount for the same policy year, allowing the policyholder to avail of further medical treatment without incurring additional expenses.

Types of restoration benefit

There are usually two types of restoration in health insurance available in the market:

• Fixed restoration benefit:

It is a type of benefit in which the insurer offers a fixed restoration amount benefit equivalent to the sum insured amount. Let's say the policyholder has an insurance policy with a coverage amount of Rs 5,00,000. Suppose the policyholder has undergone surgery and used up the entire amount. But later in the same policy year, he gets sick and again needs hospitalisation. His insurer will restore his coverage amount to Rs 5,00,000. That means he will have a total coverage amount of Rs 10,00,000 for that policy year. But the restoration benefit will be applicable after you exhaust the total sum insured.

• Partial restoration benefit:

This kind of restoration has a slight edge over the fixed restoration benefit as one does not have to exhaust the entire sum insured to avail of it. For example, let’s say a policyholder has a health insurance policy with a sum insured amount of Rs 5,00,000 and a partial restoration benefit of Rs 2,00,000. In a policy year, the policyholder incurs medical expenses of Rs 5,00,000, exhausting the entire sum insured amount. Under partial restoration benefit, the insurer will restore only a part of the sum insured amount, which in this case is Rs 2,00,000. So, the policyholder will have a total sum insured amount of Rs. 7,00,000 for the same policy year.

Benefits of buying a health insurance plan with restoration benefits

If you are planning to buy a medical insurance plan, considering a policy with restoration benefits can be helpful in numerous ways. Here are some of the advantages of purchasing a health insurance policy with restoration benefits:

• Increased financial protection:

The additional sum insured after the exhaustion of primary coverage provides a financial cushion and protects you from unexpected medical expenses that might arise during the policy year.

• Multiple claims:

Restoration benefits can enable you to make several claims during the policy year. Its advantages are more apparent to policyholders with various ailments or those requiring frequent doctor visits.

• Cost-effective:

Health insurance policies with restoration benefits might be slightly more expensive than standard policies. However, they can be cost-effective in the long run as they provide additional financial protection without requiring the purchase of another plan.

• Peace of mind:

Knowing you have a health insurance policy with restoration benefits can give you peace of mind. You can be confident that you have additional financial security and can cover any unexpected medical expenses.

Features of restoration benefits in health insurance

You must understand the restoration of cover in health insurance meaning to make an informed choice. Some of the most common features of restoration benefits are:

• It is important to note that the restored sum insured does not get carried forward to the next policy year. It is applicable only for the remaining policy term.
• You can buy the restoration benefit as an add-on feature along with your insurance policy at a nominal extra cost.
• It is worth noting that restoration benefits are only available for future claims, not current or ongoing claims.
• The restoration benefit is not limited to policies with a higher sum insured. One can purchase it in conjunction with any given sum insured based on the policyholder’s needs.

Who should opt for a restoration benefit?

The restoration add-on may not be for everyone. But this cover makes sense if you belong to one of the categories like being an individual with a history of multiple illnesses, require frequent medical attention, need additional financial protection in your health insurance policy, seek flexibility in making claims, or wish to avoid the hassle of purchasing another policy. It would also be beneficial for individuals worried about unexpected medical expenses that might arise during the policy year. Policyholders with family floater plans will also find it advantageous as the sum insured gets shared among everyone covered under such policies.

Does restoration benefit increase the policy premium?

Restoration benefits are typically offered as a add-on, which means that any additional coverage beyond the standard plan will increase the premium to some extent. However, it is important to focus on how the add-on will benefit you in the long run rather than just the increased premium.

Consider the following scenario: a 28-year-old policyholder with no illnesses chooses a standard plan, which costs around Rs 5,000. If he decides to include the restoration add-on, the extra premium would be around Rs 1,000-1,500.

Insurers consider factors such as age, medical history, sum insured, and type of plan when determining the premium for restoration benefit add-on.

Things to consider while opting for restoration benefit in health insurance

If you are considering opting for restoration benefits in your health insurance policy, here are a few things to keep in mind:

• Claim Process:

Understand the claim process for restoration benefit and ensure it is hassle-free. Check whether the restoration benefit claim process is the same as the regular claim process.

• Exclusions:

Restoration benefits may come with certain exclusions, such as pre-existing illnesses or specific treatments. Make sure to read the policy documents carefully to understand the exclusions.

• Waiting Period:

Restoration benefits may come with a waiting period, which means that you may only be able to avail of the benefit after buying the policy. Check the waiting period before opting for this rider.

• Restorations permissible:

Determine how often you can use the restoration benefit in a policy year. Most policies restore the sum insured only once a year.

• No carry forward:

Restoration benefits in health insurance do not get carried forward to the next policy year. You can use it only within the same policy year.

Frequently asked questions on restoration benefits in health insurance

Q1. Can you avail of restoration benefits in health insurance in the same claim?

No, you cannot avail of restoration benefits in health insurance in the same claim. Restoration benefit restores the sum insured amount for future claims after the current sum insured has been exhausted during a policy year.

Suppose you have a health insurance policy with a sum insured of Rs 4,00,000, but your hospitalisation costs amount to Rs 7,00,000. In such a case, you must pay the additional Rs 3,00,000 from your wallet. However, if you require hospitalisation again soon, your sum insured will be reinstated to Rs 5,00,000.

Can two members of the family suffering from the same disease claim restoration benefits?

Restoration benefit in health insurance is available only for future claims, and only one covered individual can raise a claim for this at a time. To claim restoration benefits, the trigger point for the medical condition must occur at different time intervals. However, restoration benefits may apply to multiple covered members in a family floater plan in some exceptional cases. For example, in the event of an accident resulting in multiple injuries and hospitalisations, different members are eligible to receive the restoration benefit. It is vital to read and understand the terms and conditions of the health insurance policy to determine eligibility for restoration benefits in different scenarios.