Restoration Benefit in Health Insurance: How does it work and how to make the most of it?
03 Nov 2018
Quite common amongst the family floater plans, restoration benefit covers all the members insured in a health insurance policy.
Most of the insurers restore the total sum insured only if the entire sum insured and the cumulative bonus are exhausted under a single claim.
Most people these days strive to bear the growing portion of the financial responsibility for their healthcare. Moreover, a comprehensive health insurance policy you usually buy only covers hospitalisation expenses up to the total sum insured. Considering the rising health-care costs, it is quite possible that the entire sum insured gets exhausted in a single hospitalisation and this is when ‘restore benefit’ in a health insurance feature comes in. Restoration benefit is a feature that reinstates the total sum assured if it is used up in any given policy year. Quite common amongst the family floater plans, restoration benefit covers all the members insured in a health insurance policy. Though the data shows that the probability of people opting for restoration benefit is quite low – less than even 0.5 per cent– the feature still remains very important. Moreover, almost every comprehensive medical plan including standalone health insurance policies come with a built-in restoration feature.
How Does It Work
To put it simple, the restoration benefit restores the entire sum insured if it is exhausted in a given period of time. In case you have bought a family floater policy and at the time of hospitalization, you use the entire sum insured in the beginning of policy term, your restore benefit will automatically reinstate the full amount of sum assured on exhaustion of the sum insured. The restore benefit works as back-up as the entire sum insured is replenished for the policy holders. The restoration plan is best suited for people with Family Floater plans. Under most insurers, restoration benefit is available only for unrelated claims. However, Apollo Munich Health Insurance’s Optima Restore plan is one plan available in the market that offers restore on all illnesses but not the same claim.
One of the thumb rules of determining the premium of an insurance cover is this – the more features that have been bundled on to the policy, the higher is its premium. However, though the exact amount of increase in pricing with the restoration benefit cannot be computed, it certainly stretches the premium amount. This is an extra cost that an insured person bears for the additional cover. Also, a health insurance company is not allowed to charge a higher premium from the customer post a claim. The rule applies to restoration plans as well and the cost for this benefit is built-in from day one.
Check Before You Buy
Before buying a restore benefit cover, do make sure to get some important questions answered:
# Do you need to exhaust the entire sum insured in one claim?
Most of the insurers restore the total sum insured only if the entire sum insured and the cumulative bonus are exhausted under a single claim. Before buying a health cover, ask your insurer when the restore feature is activated in your policy. While some insurers have a condition that you must exhaust your entire sum insured before the feature is activated, many insurers even have a feature under which the restore benefit is automatically activated during hospitalization. This is certainly a better option as you do not have to wait for the next hospitalisation.
# Do you need to buy higher sum insured for the feature?
Most of the health insurance service providers offer the restoration benefit regardless of the total sum insured. Moreover, there is yet another important thing that you must learn about the restore feature. Restore benefit in a health cover unlike no-claim bonus cannot be carried forward to the next year. The feature is not a carry-forward benefit as if you don’t utilise it, you won’t get any credit in the next policy term.
# Does it cover same illnesses?
Before zeroing on a policy, do check if the policy even covers ailments for which the policy has already been used earlier. In simple words, under some policies if you have used the sum insured for a specific disease like heart attack, you cannot use the replenished sum insured for the same problem again within the same policy term. The restored sum insured can still be used by other members for the same disease. However, some policies cover even the same illness as they provide the option of reinstatement of sum insured for treatment of the same ailment during a policy year.
(Disclaimer: These are the author’s views. Readers are advised to consult their financial advisor before buying any plan)