Restoration benefit: Does it work for you?

Your health insurance may not be enough to take care of multiple exigencies. What are your options?

Explaining restoration benefits and how they enhance your health plan

Ever so often, when someone reads an article on health insurance, it is out of idle curiosity. He or she is probably already protected under a health plan, but on coming across a write-up on the subject, thinks: “Hey, I’m covered, but let’s read this anyway, let’s see if this guy has anything new to say.”

If you are one of those people who has a health plan and believe you are equipped to meet any medical exigency because of it, here is a question: “What are the options before you if need to make a claim a second time in one plan period after you have exhausted the entire sum insured for that policy year?”

As you probably know, the insurer won’t pay up. A comprehensive health insurance plan provides coverage only up to the sum insured, and the insurer will bear the costs right up to the amount you are entitled to under the plan, but it is not liable to compensate you for a second claim.

Does that mean you have nothing to fall back upon except to dip into your savings if you need to be hospitalised once again in the same period, or take a loan? Are those the only avenues before you?

If you don’t have the answer to that, read on.

Related: Rider or standalone health insurance plan: why should you opt for?

Restoration Cover

The answer is that there is indeed another avenue before you. An insurance cover for repeat hospitalisation in a year provided you got it added when buying your health plan. 

Known as 'restoration cover' and often also referred to as the 'refill option', it is a benefit that is offered these days most with comprehensive health plans – be it a single standalone policy or one for the whole family. Generally an add-on to the health plan, it may at times also be inbuilt in the actual policy.

If you buy this additional option along with your regular health plan, it will come in handy in case of a second hospitalisation within a policy year, as the restoration option comes into effect automatically with the insurer reinstating the sum insured. In other words, this option effectively doubles the sum insured, which is what comes to your rescue.

However, despite its benefits, the restoration cover is generally overlooked by new policy buyers, probably because of the extra costs involved. Let us explore the pros and cons of this facility, and see if giving the option a go-by is worth it.

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Restoration Advantage

As explained earlier, the sum insured gets automatically renewed without the need for any additional premium or having to wait till the renewal date if the entire sum has been exhausted; it is not too improbable a scenario – medical expenses for cardiac arrest cases can do that.

At the same time, a policyholder repeat hospitalisation in a single term period is not a frequent occurrence, and you may wonder if this feature is required in the first place.

And your doubts would have been misplaced, for the add-on makes immense sense if the health policy you have is a family floater plan.  Thus, if one person exhausts the sum insured, the other members will be left with no health cover for the rest of that policy year. But with the restoration benefit, the sum insured will be replenished automatically.

Also, god forbid, suppose you meet with a road accident after having spent the sum insured on bypass surgery and need immediate hospitalisation?

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Restoration Types

You might wonder, does one have to exhaust the entire sum insured in one is to avail of the restoration benefit for a second instance of hospitalisation, if needed?

No, you should know that complete exhaustion of sum insured is just for one type of restoration benefit, which comes in two forms –  total exhaustion of the insured sum, and partial exhaustion.

The first type – as explained earlier to make the concept simpler – becomes effective only when the total insured sum is exhausted. This includes the bonus too. Thus, if your total insured sum is Rs 10 lakh, and the first claim was for Rs 5 lakh, it means there is still some amount available, which will prevent the restoration benefit from coming into play for a subsequent claim.

On the other hand, if you overspend – say, you spend Rs 12 lakh – the remaining Rs 2 lakh will come from your pocket. However, if you are hospitalised again for some other cause, the sum insured will be restored to Rs 10 lakh again, even if you have exhausted it.

What this means is that:

  • Restoration benefit is strictly for future claims;
  • The is not available for the first claim;
  • The benefit cannot be availed of in the same claim. 

The second type of the benefit mentioned, partial exhaustion of the insured sum, is more suitable for most people as, unlike the first option, it becomes effective even if the insured sum is only part spent. In this type of the restoration feature, there is no need to exhaust the entire sum insured in one claim to avail of the restoration benefit.

So, if your health insurer offers this feature, find out what type it is. Also remember that insurers often make tweaks: for instance, with some plans, there is no limit on the number of times the benefit comes into play in a policy year.

Related: Understanding your Health Insurance policy

Restoration Premiums 

The restoration clause is like a pizza topping; sometimes it comes 'inbuilt' with the main item but mostly it is an add-on – an 'extra'. And like everything extra, it comes at an extra cost, or a premium. This extra premium amount depends on the term, plan type, other added features and of course, the insurer.

Also note that the insurer cannot raise the premium after the policyholder has made a claim, and the earlier amount stays in place once the restored benefit becomes operative.

Restoration Condition 

You should also note that there is one condition that has to be met for restoration benefits to kick in: the disease or ailment for which the second hospitalisation has had to be made cannot be related to the medical condition for the earlier one. In other words, it is not applicable to the same illness.

However, a few insurers do offer the feature for the same ailment but after a gap of a month or two, and they charge a premium.

There is one aspect that has been mentioned earlier, but needs retelling because it is one of the most vital conditions for the benefit to become active: restoration is not available for the first claim. And when offered in case of the first claim, it is done so only for accidental hospitalisation.

Finally, the benefit cannot be carried forward if not consumed in the same policy year of restoration.

Related: Why it makes sense to combine a Hospital Cash Plan and Indemnity-based Health Insurance?

Family Floaters

The feature comes as an especially handy benefit for family-floater insurance policies, as it ensures that other members of that family covered under the plan are not deprived health cover simply because one member has exhausted the sum-assured.

However, what makes restoration in family floater plans very interesting is if there is hospitalisation of multiple family members. Hospitalisation can be either due to an accident, or due to a common ailment or a disease, and the insurer’s approach is different for each case. Let us examine both:

  • Accidents: In case of multiple injuries to family members (all covered under a floater health policy), the restoration benefit will effectively raise the sum insured – by multiplying the original sum with the total number of people injured. Say the sum insured is Rs 5 lakh, and three members of the family are injured in the accident; in such a case, each injured person covered under the policy will get Rs 5 lakh as the sum insured, effectively raising the total sum insured to Rs 15 lakh.
  • Same Ailment/Disease: As restoration benefit is only for future claims, only one person at any given time can avail of it; for everyone to benefit, the disease must at different times.

What has been explained here is only the broad concept of how restoration works in a family floater plan; to get the maximum benefit, read the fine print carefully – or sit with your insurance agent/insurer for clarifications – as different insurance company may have different policies on this.

For instance, some floater plans do not extend the benefit to the family member who makes the claim, but only to others of the family covered under that plan. Then again, another plan may allow the same person to avail of the restored sum-assured but for a different medical condition, while there may be yet another that offers the benefit to the same member for the same problem. 

Related: Unique features offered by different health insurers

Last Words

You do not have to insure a huge sum to make sure that the restoration benefit comes into play when you need it, it works on any amount, and for both family floaters and individual health plans.

However, like most things in life, this too comes with its own set of pros and cons. Read the document carefully, acquire a complete understanding of the applicable conditions, and then choose a policy that best suits your requirements. After all, it is your health and that of your loved ones that we are talking about here. Confused about which health insurance plan to opt for?  Compare these 5 health insurance plans

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