Understanding Restoration Benefits in a Health Insurance Policy

What is Restoration Benefit in Health Insurance?

Restoration Benefit, also known as Refill Benefit, is a feature of Health Insurance Policy where the Insurance Company restores the Coverage Amount under the Policy after the Policy Sum Insured is exhausted due to a Claim raised under the Policy. Thus, Restoration Benefit allows the Policyholder to raise a Claim under the Health Insurance Policy after exhaustion of Sum Insured as the Restoration Benefit ‘restores’ the Sum Insured to its original amount. For example, if the sum insured of Policy A is 10 lakhs and the Insured raises a claim of Rs.6 lakhs, the remaining amount that the policy can cover is only Rs.4 lakhs. However, in a Policy with Restoration Benefit, the Sum Insured will be restored to the original amount of Rs.10 lakhs. Restoration Benefit is an extremely important benefit of Health Insurance Policies and can be quite helpful in case where the Policy Sum Insured has already been exhausted due to past Claims under the Policy. This article will explain Restoration Benefits in a Health Insurance Policy in detail, along with practical examples to show how it works.

What are the types of Restoration Benefits in a Health Insurance Policy?

There are two types of Restoration Benefits in a Health Insurance Policy depending on the level of Sum Insured exhausted under the Policy:

Partial Exhaustion of Sum Insured

Health Insurance Policies where the Restoration Benefit is triggered even upon Partial Exhaustion of Sum Insured are more beneficial to Policyholders. Here, the Sum Insured is restored even if only part of the Sum Insured has been used up. Suppose Mr. Sharma has a Health Insurance Policy with a Sum Insured of Rs5 lakhs and a Partial Restoration Benefit. Ms. Verma is hospitalized and incurs medical expenses of Rs3 lakhs. The unutilised Sum Insured is reduced to Rs2 lakhs. The Insurance Company restores the Sum Insured back to Rs5 lakhs immediately after the Partial Exhaustion of Sum Insured. Now, if there is a second Insurance Claim under the Policy of Rs4 lakhs, the entire claim would be paid by the Health Insurance Company since the Restoration Benefit has restored the Sum Insured under the Policy to the initial amount of Rs5 lakhs.

Complete Exhaustion of Sum Insured

The Sum Insured is restored only after the entire Sum Insured under the Policy is exhausted.

For eg. Imagine Mr. Sharma has a Health Insurance Policy with a sum insured of Rs5 lakhs and a Restoration Benefit.

Scenario 1: Mr. Sharma is hospitalized and incurs medical expenses of Rs5 lakhs. His entire sum insured is exhausted. In this case, Mr. Sharma’s Restoration Benefit comes into play and his sum insured is restored back to Rs.5 Lakhs. If there is another Health Insurance Claim in the same Policy Year, the same would be covered under the Restoration Benefit.

Scenario 2: Mr. Sharma is hospitalized and incurs medical expenses of Rs4 lakhs. His entire Sum Insured is not exhausted. Now, if Mr Sharma has a second Health Insurance Claim of Rs2 Lakhs within the same Policy Year, then the Health Insurance Policy would pay only Rs1 lakh under the Policy since Mr Sharma has Rs1lakhs of Rs5 lakh Sum Insured which is unutilised under the Policy. The Restoration Benefit does not apply for the Second Claim since the Sum Insured was only partially exhausted (Rs4 lakhs) during the first Claim. The Restoration Benefit will only trigger from the third Claim onwards when the Complete Sum Insured gets exhausted in the second claim. Thus, Health Insurance Policies requiring complete exhaustion of Sum Insured for Restoration benefits to trigger are inferior to Health Insurance Policies requiring only Partial Exhaustion of Sum Insured.

Key Points to Consider While Availing Restoration Benefits under a Health Insurance Policy

While the restoration benefit is highly advantageous, there are certain points one should keep in mind:

Specific Conditions

Restoration Benefits in Health Insurance usually come with specific conditions. For instance, some Health Insurance Policies may restore the Sum Insured only for Unrelated Illnesses or Hospitalizations. If the Policyholder is hospitalised with the same illness for a second time, the Restoration Benefit will not trigger in such a case. It’s essential to read the Policy Document carefully to understand these conditions.

Only One Restoration of Sum Insured Per Year

Most Health Insurance Policies allow the Restoration Benefit to restore the Sum Insured only once per Policy Year. If the Restored Sum Insured is exhausted again, it may not be reinstated until the Policy is renewed. Additionally, the Restored Sum Insured under the Policy cannot be carried forward to the next Policy year, even if the Restore Sum Insured is unutilised during the current Policy Year.

Not a Replacement for Top-Up Plans

Restoration Benefits should not be confused with Top-Up or Super Top-Up Health Insurance Plans. While Restoration Benefit reinstates the Sum Insured within the same policy year, top-up plans provide additional coverage beyond a certain threshold.

Advantages of Buying Health Insurance Plans with Restoration Benefits

Important for Family Floater Health Insurance Plans

Restoration Benefit is particularly beneficial in cases of multiple hospitalizations or Family Floater Health Insurance Policies where other members of the family can continue to avail coverage even if the Sum Insured is exhausted.

Peace of Mind

Restoration Benefit in Health Insurance offers an extra layer of financial security by ensuring that the Sum Insured is available even after it has been exhausted once. Knowing that your coverage will be reinstated can provide immense peace of mind, especially during a health crisis. The Insured does not have to worry about running out of coverage in case of subsequent medical emergencies within the same Policy Year.

Enhanced Coverage

Restoration Benefit effectively enhances the coverage of Health Insurance Policy without a corresponding increase in premium. It is a cost-effective way to ensure that you have sufficient coverage throughout the year.

Factors to consider when buying a Health Insurance Policy with Restoration Benefits

When selecting a Health Insurance Policy with a Restoration Benefit, Policyholders should consider the following:

1. Coverage Needs: Assess the family’s health insurance needs to determine the appropriate Sum Insured and whether a Restoration Benefit is necessary.
2. Policy Terms and Conditions: Carefully read the policy document to understand the specific conditions under which the Restoration Benefit is applicable. Look for clauses related to Unrelated Illnesses, Requirement of Partial or Complete Exhaustion of Sum Insured, and any other restrictions.
3. Premium Costs: While the Restoration Benefit provides enhanced coverage, it’s important to evaluate the Premium costs. Compare policies from different Insurers to find one that offers the best balance between coverages and affordability.
4. Network Hospitals: Ensure that the Insurance Company has a wide network of hospitals, especially those that are easily accessible to you. This can be crucial during emergencies.
5. Claim Process: Check the Insurance Company’s Claim Settlement Ratio and the ease of their Claim Process

Qian is a licensed Health Insurance Broker in India with experience of serving clients for their Insurance requirements over the years. If you wish to purchase a Health Insurance Policy, you can email us at insurance@qian.co.in or call us on 022-35134695. We would be glad to assist you.