What is restoration benefit in health insurance?

Team Digit, 30 Nov 2018

Restoration benefit is a coverage in your health insurance, in which if your Sum Insured gets exhausted towards treating an illness, the insurance company restores it.

You have got a health insurance. And you buy into this idea that you have done the spadework to battle any health issue. But comprehensive health insurance covers just up to the total sum insured. With the ever-growing cost of healthcare, you may exhaust your entire sum insured in a single claim. So, what then?

That is when restoration benefit in health insurance comes to your rescue. Restore benefit reinstates the total sum insured once you exhaust it in a single claim within the policy term. In today’s time almost every comprehensive health insurance plan, be it standalone or family health insurance policy, comes with restore benefit. But often, it is an overlooked feature and not everyone opts for it. So, let’s explore what ‘restoration benefit in health insurance’ has in store for you. 

How does restoration benefit in health insurance really work?

Say a person has been admitted for cardiac arrest. And this one-time hospitalisation alone has used up the entire sum insured. But thanks to his smart decision, the sum can be renewed without paying additional premium or waiting till the next renewal and claimed again within the policy term – all credit to the restore benefit. This feature is ideal for those with a family floater plan. The only condition to be kept in mind is that restore benefit can be used only for non-related diseases.

Let us explain it to you with some numbers. Suppose you have a family floater policy of 5 lakhs, and 4 members of your family are covered in it, including you. Unfortunately, one person of the family had to be hospitalized and the expenses had come up to 5 lakhs. So, the other 3 members are left with only no health insurance for the rest of the year. But if you opt for restore benefit, as soon as any other member of the family has a need of hospitalization, the Sum Insured will again be restored to 5 lakhs!

What about the premiums for restore benefit?

While some health insurers offer restore benefit inbuilt in the health insurance plan, others offer it as an add-on, which like everything, comes with an extra price. If you opt for this feature, you will have to pay a higher premium – the exact amount varies based on the term, type of plan, other add-ons. On the bright side, once the claim is exhausted, the renewed sum also requires you to pay the same premium as before. In fact, a company is not allowed to hike the premium post a claim.  And for health insurers who offer it as an inbuilt benefit do not charge anything extra. So, the price or premium differs according to the plan.

Is Restore benefit applicable to the same illness?

Few companies offer restore benefit for the same illness with a gap of 30 to 45 days with an extra price.

Otherwise the industry practice is --- restoration benefit in health insurance can only be availed if there is hospitalization for unrelated diseases. For instance, you had to hospitalized for a fracture and claimed your health insurance. Unfortunately, in the coming months you get affected by swine flu. Your restore benefit will be activated for your health insurance claim as the hospitalization done are not for the same illness.

Can you avail restoration benefit in health insurance in the same claim?

Restore Benefits are mostly for future claims. So, it cannot be availed on the same claim. For instance, if you a health insurance policy of 5 Lakhs, but your hospitalization expenses come to 8 Lakhs, the extra 3 lakhs you will have to pay from your pocket. But if you need to be hospitalized again in the coming days, then your Sum Insured will be restored to 5 lakhs again, although you had already used up the entire limit in the last claim. However, there are some health plans where if the claim exceeds the Sum Insured that will trigger the restore benefit automatically.

Do you need to exhaust the entire sum insured in one claim to avail restore benefit?

For most health insurers, the total sum insured is restored only if the entire sum insured is exhausted under a single claim. But there are also some health insurers who offer restore benefit as soon as there is any hospitalization required. There are also some plans which can be restored unlimited times in the policy year So, it is always advisable to check with your health insurer before opting for this benefit.

What happens in case of an accident with a family floater policy?

In case of accidents, some health plans ensure that the insured members have an unlimited coverage. Say someone has a family floater policy with a limit of 5 lakhs as Sum Insured. Unfortunately, in an accident, 3 members of the family get injured. The Restore benefit will kick in here, where each of the injured family members covered under the policy will get 5 Lakhs as the Sum Insured, so effectively the Sum Insured will get raised to 15 lakhs from 5 lakhs.

Can 2 members of the family suffering with the same disease claim for restore benefit?

Restoration benefit can be claimed for only future claims, so only one person at the time can avail it. The trigger point for disease must be at different time intervals. However, in some special cases restoration will work for different person in the family floater plan. Eg, due to accident, if there is multiple member injuries and hospitalization, claims for different members can be trigger for restore benefit

Do you need to have a higher sum insured to activate this feature?

No, you don’t have to insure a huge sum to activate restoration benefit in health insurance– applies to any given sum insured. But yes, you cannot carry forward this feature if not used in a given policy term. 

So, let’s quickly see what all you need to know about restoration benefit in health insurance?

  • Restore benefit reinstates the total sum insured once you exhaust it in a single claim within the policy term
  • While some health insurers offer restore benefit inbuilt in the health insurance plan, others offer it as an add-on, which like everything, comes with an extra price.
  • Restoration benefit in health insurance can only be availed if there is hospitalization for unrelated diseases.
  • Restore Benefits are only for future claims.
  • For most insurers the entire sum insured needs to be exhausted to avail the restore benefit, while for others it gets activated with the next hospitalisation.
  • In case of an accident, for a family floater health insurance, few plans are available for restoring the Sum Insured basis each member otherwise it’s only one Sum Insured that gets restored.
  • Restoration benefit can be claimed for only future claims, so only one person at the time can avail it. But in special cases like an accident, if two people sustained injuries, get hospitalized and one member exhausts the Sum Insured, some insurers do pay the for the expenses of the other member too, through restore benefit.
  • You don’t have to insure a huge sum to activate restoration benefit in health insurance– applies to any given sum insured.

Restoration benefit in health insurance has its own set of pros and cons. It all comes down to how you read the fine print of your insurance document and avail the benefits that best suit your requirements. After all it’s a matter of your health, test the water before you jump in.

Team Digit

Digit is a General Insurance company on a mission to Make Insurance Simple for people. We are backed by Fairfax, one of the largest insurance companies in the world.

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