Important features and benefits of a health plan and your customized requirement should not be taken a backfoot while glaring at the restoration feature.
Every one of us gets excited when we get a refill on our beverage in a restaurant free of cost or may be at a nominal additional cost.
Such a similar feature is prevalent in a health insurance policy as well known as “restoration benefit” or refill benefit. Now, here your beverage is the sum insured (health cover) under the health policy which gets refilled or restored by your insurance company in case it gets finished off or exhausted during the annual policy tenure. So, your health cover resumes back to the same amount (or maybe more) if you exhaust or utilise it as per the scope of coverage offered under your health plan.
It is a perceived benefit and is often pitched as “getting a double sum insured” at a nominal premium cost.
Let us understand with an example:
You have opted for a health plan of Rs 3 lakh. Now during the policy year, due to multiple claims, your 3 lakh worth cover is exhausted. Your health policy which comes with a restoration benefit will restore your health cover back to Rs 3 lakh in the same policy year.
But is this feature as simple and easy to claim or get the benefit as simple it looks?
Maybe not, there are specific terms and conditions attached with the restoration benefit which one might skip to read while buying a health plan offering auto restoration feature.
Let us unveil the conditions related to the restoration benefit:
Condition 1: Restoration benefit will trigger for an unrelated medical condition
If your earlier claim in the policy is due to a specific ailment or medical condition let’s say related to a kidney disease which resulted in consumption of your entire sum insured including your no claim bonus (if any). After a couple of months maybe you are again hospitalized basis the same kidney ailment only. Then, in that case, the restoration benefit under your policy will not be triggered as it says, it will be triggered only if you are hospitalized due to an unrelated medical condition/ailment/illness.
There is one such plan which is an exception to this condition it is the Apollo’s Optima Restore which offers restoration for the related medical condition as well.
Condition 2: Restoration will happen on exhaustion of complete sum insured or partial sum insured
You might be under the impression that at any point within a policy year if you fall short of the sum insured your insurance company will resume it. But, it all depends upon the health plan opted where some plans have the clause of restoring the sum insured on complete exhaustion of sum insured (including no claim bonus- NCB) whereas other plans say even if the sum insured is partially exhausted and still you are falling short we will restore it.
Let us understand it with an example:
You have a sum insured of Rs 5 Lakh, the first claim in a policy year is of Rs 4.5 Lakh, which is paid as the maximum limit of sum insured is of Rs 5 Lakh. Now only Rs 50,000 is left in your health policy kitty. Second policy claim due to unrelated illness is of Rs 2 Lakh.
In case of Complete Exhaustion Clause:
If your health plan says it will activate restoration benefit on complete exhaustion of sum insured, then in that case claim 2 which is of Rs 2 lakh (50,000 you still have in your sum insured kitty) Rs 1.5 Lakh will be paid as out of your pocket expense. Since your sum insured kitty was not entirely exhausted when claim 2 occurred. For any unrelated claim 3 in the same policy year, will trigger the restore benefit.
In case of Partial Exhaustion Clause:
If your health plan says it will activate restoration benefit even on partial exhaustion of sum insured, then in that case for claim 2 (wherein still you have Rs 50,000 in your kitty) will trigger the restoration benefit and the insurer will pay the claim.
Condition 3: Restored sum insured is not liable to be carried forward to the next policy year
The sum insured restored in a policy year will be restricted to that specific policy year only. The unutilized restored sum insured will not be carried forward to the next policy year in anyways.
Condition 4: Restoration will trigger for subsequent claims
It is another clause which gets diluted which says that the restoration benefit will not kick in for the first claim and will trigger for subsequent claims in a policy year. However, for accident related claims some insurers might restore the sum insured in case it falls short being the first claim of the policy year.
Frequency and quantum of restoration benefit in a policy year
Mostly restoration benefit will be offered once in a policy year up to the 100% restoration of the base sum insured. There are plans which offer unlimited restorations in a policy year as well but obviously at an additional cost like Aditya Birla’s Activ Assure. Also, there are few plans like Star Health’s Mediclassic health plan which restores sum insured up to 200% of the base sum insured.
It is vital to read between the lines and its actual utility before you get carried away with just by the statement that “restoration benefit offers double sum insured under your health policy.” Entirely relying on restoration benefit for your higher sum insured needs might not serve the purpose. It is prudent to take a top up or a super top-up policy which comes into play when it is an actual requirement to combat a high sum insured claim and your base sum insured falls short for it.
Restoration benefit is more useful for a family floater health plan than an individual health plan. It is because the exhaustion of sum insured is more likely and restored sum insured will float among the members insured making it more probable utility.
Also, other important features and benefits of a health plan and your customized requirement should not be taken a backfoot while glaring at the restoration feature.
Overall, it is a good value-add benefit to the health plan but must be understood carefully and optimally before falling for it.
Disclaimer: Health plans mentioned in the article are just for the understanding of the concept, the author or the company by any means are not biased about any specific health plans.The writer is Co-Founder & CEO of Easypolicy.com