What is the restoration benefit in Health Insurance and how to use it?
Ever since the outbreak of the Covid-19 pandemic, the demand for health insurance has increased many fold. With a rise in the Covid -19 cases in India especially during the 2nd wave, there has been a growing awareness and demand for health insurance plans in India. In fact, only in March 2021, there has been a phenomenal 41% rise in the health insurance industry. There has been a constant rise in demand for high sum insured health insurance plans in India. More people started opting for health insurance plans of INR 1 CR, especially from people in the age bracket of 30-40 years. Along with a rise in demand for high sum insured, features that enhances coverage such as restoration benefit has also become quite popular. It is a common feature and is largely available with many health insurance plans in India. Also called the sum insured restoration, or recharge benefit, this benefit gives you additional coverage if you use up the sum insured. The restoration benefit is a coverage benefit wherein the sum insured gets restored or refilled after the original coverage is fully exhausted. Let me explain with an example. If you have a health plan of INR 10 lakhs and you spend INR 11 lakhs in hospitalisation. Even then, the entire coverage of INR 10 lakhs would be available in the next policy year. However, if you need to claim again for say INR 4 lakhs in the same policy year, your health plan would not pay any further, since you have exhausted the entire limit (of INR 10 lakhs) in that policy year. However, if you have Restoration Benefit after the entire sum insured of INR 10 lakhs is over, the insurer automatically refills the coverage for you to claim again in the same policy year. So, if you have Restoration Benefit, it works like a Stepney in your health insurance plan, i.e. a backup in case your primary coverage is exhausted. This would, therefore, reduce or eliminate your out-of-pocket expenses. Using the restoration benefit  There is no particular formality of making use of the restoration benefit. The restoration happens automatically. If your plan has the coverage feature and the sum insured is exhausted, the insurance company would restore the sum insured automatically for any subsequent claim. You dont have to follow any process to ensure the implementation of the restoration benefit. Terms and conditions associated with the restoration benefit  Though the restoration benefit sounds straightforward, there is often a fine print attached to it. This fine print states the terms and conditions for the applicability of the restoration benefit. Here are some common terms and conditions that you should know about   1. Applicable for unrelated illnesses  Under most health insurance plans offering the restore benefit, you would find that the benefit is allowed only if the subsequent claim is for an unrelated illness. This means that the subsequent claim should not be related to the first claim. If it is, the restoration feature wont work. For example, say a policyholder used up the sum insured on angioplasty. If the policyholder were to make a subsequent claim, it should not be related to complications due to or related to the angioplasty. The subsequent claim should be for an unrelated illness for the restoration benefit to work. That being said, some plans allow the restoration feature even for related claims. You, therefore, need to check the policy wordings regarding the same. 2. Complete utilization of the sum insured  Under most plans, the restoration feature is available if the sum insured is fully used up. If the sum insured is remaining, the restore feature would not apply on the second claim. For instance, say you have a sum insured of INR 10 lakhs and, on the first claim you use up INR 7 lakhs. Since INR 3 lakhs is remaining, the restore benefit would not apply on the second claim. If the second claim is INR 4 lakhs, INR 1 lakh would be your out-of-pocket expenses. Then, if you make a third claim, the restore benefit would be available. 3. Restoration amount  Under most plans, 100% of the sum insured is allowed to be restored. Some plans might restrict this percentage to 50% while some even allow up to 200% restoration. Moreover, under some plans, you can choose to enhance the restoration amount through an add-on. Points to keep in mind about Restoration Benefit:  Restoration Benefit is available only after the entire coverage is exhausted  It is never available in the initial claim. Only when the coverage is completely exhausted in the initial claim, it is available for subsequent claims in the same policy year  You cannot carry forward any unutilized restoration benefit to the next year  The benefit is usually found inbuilt in the coverage structure of many plans  Most plans allow restoration once during the policy year. Some plans, however, go the extra mile and allow unlimited restorations too. In the case of family, floater plans the restoration benefit can make all the difference if there are multiple claims from different members. So, look for the feature when buying health insurance to enjoy enhanced coverage and to minimize your out-of-pocket expenses. By Dhirendra Mahyavanshi, Co-Founder, Turtlemint (An InsurTech Company)