Health insurance plans play major roles in providing financial security against unexpected health expenses. With the rising cost of healthcare, having a good health insurance plan has become essential. Among the many features offered by modern policies, the reset benefit stands out as a valuable option that can enhance your coverage. Let us know more about this in detail.
What is the reset benefit in health insurance?
The reset benefit, referred to as the restoration benefit, is a feature offered by health insurance providers that automatically restores your sum insured if it gets exhausted within a policy year. For example, if you have a policy with a sum insured of ₹5 lakh and you make a claim that uses the full amount, the reset benefit ensures the sum insured is replenished so you can continue to receive coverage for future claims in the same year.
This benefit is particularly useful in cases where multiple claims are likely, such as during serious illnesses or hospitalisation of more than one family member. That’s why it’s often recommended when choosing a health insurance policy for a family, where the chances of multiple claims are naturally higher.
Features of reset benefit
The reset benefit comes with several key features:
- The entire sum assured has to be exhausted for its restoration
- The restored amount can only be used for future claims that happen to fall within the same policy year
- The new claim should not be related to any illness/disease/injury for which a claim has already been made in that policy year
- The reset benefit will never trigger for the first claim
To understand this feature better, let us consider an example.
Mr. Kumar has a health insurance plan of ₹ 5 lakhs with reset benefit and he makes a claim of ₹ 7 lakhs. According to him, his full claim amount should be paid owing to the reset benefit option. However, in reality, this is not possible, since the reset benefit triggers only for a second claim. Therefore, he will have to pay the remaining amount out of his own pocket.
- The sum insured of individual health insurance and floater health insurance policies will be available as per their respective policy terms.
- Unutilised reset sum insured will not be accumulated and carried forward in the next policy year.
Does restoration benefit increase the medical insurance premium?
The reset or restoration benefit is generally included as an add-on or in-built feature in many comprehensive insurance plans. While it may slightly increase the overall premium, the added protection often justifies the cost, especially for family health insurance policies, where multiple claims in a year are more probable.
In some cases, policies with in-built reset benefits may have a marginally higher premium than basic plans.
Things to know about the reset benefit
Before choosing a health insurance policy with a reset benefit, here are a few important things to keep in mind:
- Check the conditions: Not all reset benefits are the same. Some may only activate after full exhaustion of the sum insured, while others may also require the claim to be for a different illness or individual.
- Policy type matters: The reset feature is more beneficial in floater policies, where one claim by a family member could otherwise leave the rest uninsured for the year.
- Limits on reset amount: Some insurers may offer partial restoration (e.g., 50% of the sum insured) rather than full. It’s crucial to read the policy document to know exactly what’s covered.
- Not a replacement for top-up plans: The reset benefit is useful, but it shouldn’t be considered a replacement for having an adequate base sum insured or a top-up plan, especially for families with senior citizens.
Conclusion
The reset benefit in health insurance is a practical and valuable feature that enhances the utility of your policy. The benefit is quite important in times of repeated or multiple hospitalisations. For families, a health insurance policy with a reset benefit can act as an extra layer of financial protection, ensuring that coverage remains available even after a major claim.
When selecting a health insurance policy for your family, consider opting for a critical illness insurance that includes this feature.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis, or treatment. Please consult your general physician or another certified medical professional for any questions regarding a medical condition. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.