Restoration benefits in Health insurance

With the increasing instances of lifestyle illness and critical illnesses, we observe that there are multiple claims during the year. This has resulted in many individuals exhausting their medical insurance coverage within a policy year. This was especially so during the pandemic. Any subsequent illness left many running pillars to post to clear their hospital bills. 18% of Indian households incur a very high amount of medical expenses on an annual basis according to a WHO report. Also, 55 million Indians get pushed into poverty every year only because of out-of-pocket medical expenses. Like there is a solution for every problem, the optimal solution for this problem is to choose health plans with restoration benefits. 

What is the restoration benefit?

The restoration benefit enables your sum insured on the health insurance policy to be replenished to the earlier limit. As and when it is exhausted due to a claim. This benefit is available in both individual and family floater plans. Often as an add-on cover or sometimes as an in-built feature as well. It is also called the refill or recharge benefit as well. 

Let us understand this with an example:

Rohan has a health insurance plan of Sum Insured Rs 5 lakhs with restoration benefit. However, he had to undergo lung surgery in a particular year. He exhausted the entire amount of Rs 5 lakhs within the first 4 months of the policy year. Normally, he would be left without a cover thereafter.

However, since his plan had a restoration benefit, his entire amount of Rs 5 lakhs was restored. He could file another claim of Rs 2 lakhs for his gall bladder stone surgery after 3 more months. 

The only catch here is, that in some cases restoration benefit is provided only for unrelated illnesses and/or on complete exhaustion of the base sum insured. However, there are some plans which offer restoration benefits for related ailments. Before the complete exhaustion of the sum insured well. These points need to be considered while opting for a health insurance plan with restoration benefits.

Do group insurance health plans offer restoration benefits?

Group insurance health plans do not offer it. Typically, this benefit is often available as an add-on feature and at an additional cost. Employers often look for basic coverage for their employees. This helps them keep the premiums low. Thereby ensuring that it does not cost the company too much to provide a group insurance scheme to employees. 

Since group insurance schemes cannot be customised, this remains one of the many drawbacks. Further, given the increase in medical expenses and illnesses, it makes sense to avail of a health insurance plan that will provide complementary medical coverage alongside a group insurance scheme. Such a personal insurance plan should include the restoration benefit, especially in today’s times when our vulnerability is quite high, and there are multiple instances of illness and claims during a single policy term. This is where personal health plans with it score well over group insurance schemes.

Advantages of restoration benefit:

Buying a health insurance plan with restoration benefits can be quite beneficial and valuable. Some of the key advantages are:

  • An additional sum insured will be available for emergencies and other health insurance claims during the same policy year.
  • If it is an inbuilt feature of the health insurance plan, then the benefit will be available without any additional cost.
  • It can provide coverage against any unforeseen medical emergencies and prepare you against all odds regarding health risks.
  • It is when opted for in a family floater plan will provide cover for all family members with an adequate sum insured. 

Types of restoration benefits:

There are 2 types of restoration benefits based on the extent of the sum insured amount exhaustion:

Complete exhaustion: This type of restoration benefit is triggered upon complete exhaustion of the sum insured. Many health insurance policies provide restoration benefits only after full exhaustion of the sum insured. 

Partial exhaustion: This type of restoration benefit is triggered even on partial exhaustion of the sum insured. It is reinstated to the earlier levels to ensure that the insured continues to enjoy the same level of coverage during the entire policy term, irrespective of intermediate claims.

To optimise your benefit on a personal insurance policy, you should opt for this type of restoration benefit. 

How to evaluate a restoration benefit plan?

Restoration benefit can be availed during the first time you purchase your health insurance plan. In case you have missed it at the point of purchase, you may consider including it whilst renewing the policy. 

Restoration benefits can be availed for any health plan irrespective of the quantum of the sum insured. This benefit is applicable only for future claims, it is not used for the first claim during the policy year. If the restoration benefit is available as an add-on cover, then you should consider adding it with your base policy. 

There are a few conditions associated with the restoration benefit of health plans, they are:

  • The sum insured restored should be exhausted in the same policy year, it cannot be carried forward.
  • The total sum insured will be reinstated even when you have exhausted the entire sum insured within the policy term with just one single claim.
  • A very valuable benefit especially in a family floater plan, if you and your family members have exhausted the base cover, your family will continue to have coverage against health hazards.
  • Only one member in the family floater policy will be allowed to avail of the restoration benefit at any given point in time. 
  • Some plans have a restriction of single time restoration of the sum insured in a policy year.

Thus, a health insurance plan with restoration benefits works as a backup to your base coverage amount; if the total amount gets exhausted for any reason in any particular year. This is a good-to-have feature when you opt for your individual health insurance plan over and above your group insurance scheme.