Buying a health insurance plan is as important as having a life insurance plan. The simple reason is that when you or your loved ones get sick, paying for medical costs on your own can cripple your finances or put you in deep debt. Therefore, with the incredibly high cost of healthcare, having the protection of a health plan is crucial.
But with rapidly rising medical costs, sometimes even your health insurance policy may not be enough, and your sum assured may get exhausted in just one hospitalisation. To tackle this problem, some health insurance policies are equipped with a clause known as the restoration benefit.
Let’s understand what a restoration benefit is and how it works to benefit policyholders.
What is a restoration benefit?
The restoration benefit is a feature in a health insurance plan that restores the sum assured to its previous balance even when the sum assured has been exhausted after hospitalisation. For example, if the sum assured on your health plan was Rs. 5 lakhs and the entire sum was exhausted due to hospitalisation, the health insurance company will restore or reinstate the entire amount of Rs. 5 lakhs within the same policy year. The restoration benefit is commonly bought with family floaters or family health plans.
Types of restoration benefit
There are two types of restoration benefit cover available for a health plan and they include:
- Complete exhaustion of sum assured - Most health insurance plans have this type of restoration cover. It simply means that if your sum assured is Rs.5 lakh, you must have spent the entire money of Rs.5 lakh on your hospitalisation for the restoration benefit to start. If you have spent anything less than Rs. 5 lakhs, it won’t be triggered, or you won’t get the restoration benefit.
- Partial exhaustion - The term is self-explanatory. In this case, you don’t have to spend the entire sum assured for the restoration to begin. For instance, if your sum assured is Rs. 5 lakhs, then even if you have spent Rs. 4 lakhs (or any amount less than or equal to Rs. 5 lakh), your restoration benefit cover will be activated.
Things to know about restoration benefit
Unlike a no claim bonus (NCB), you cannot carry forward the restoration cover benefit to the next year. If you don’t utilise the benefit in the same year, it’s gone. You also need to check if the sum assured have to be exhausted in a single claim or you can do over multiple claims in the same year. Apart from this, ask the following to your insurer regarding your restoration benefit clause:
Will the restoration benefit only trigger for an unrelated condition?
The most common answer is Yes, since most health insurance policies only provide restoration cover for unrelated medical conditions. For example, your health insurance policy gives you coverage for Rs. 10 lakh and you were hospitalised for a heart condition in February 2019 and you exhausted the entire sum assured on that claim. Again, in July 2019, you had to re-admit for the same heart condition. In this case, your restoration benefit will not work as it is for the same medical condition not unrelated one. In case, you were hospitalised for a kidney condition, the restoration benefit will be triggered.
Will the restoration benefit trigger on the first claim or subsequent claims?
Some insurers do not allow restoration benefit on the first claim, but it only starts from the second claim. Others allow subsequent claims for different family members. However, some insurers allow restoration benefit in the first claim in case of accident related hospitalisation.
Will restoration benefit increase my premium substantially?
While some health plans have in-built restoration benefit some provide them as add-ons. The insured will have to pay some extra bucks for this additional feature. How much will depend on the term, type of plan and other add-ons if any with your health insurance plan. Despite the extra cost, the benefits of a restoration cover outweigh the little extra money going out of your pocket.
Before you buy a restoration benefit cover on your health insurance policy, go through the terms and conditions carefully to make the most of the restoration benefit. If used judiciously, a restoration benefit can really be a useful tool during uncertain times.
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The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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