All you need to know about restoration benefit in your health insurance

Even in his worst nightmares, Nitesh had never imagined that he would spend all his year in the hospital. His mother had already been admitted for blood cancer, and now, his son was here too, having met with a terrible car accident a few days ago. To add to the pain of seeing his loved ones suffer, his health insurance coverage was long exhausted, multiplying the already rising financial burden of their treatment on him.

Health issues do not wait for adequate insurance policy coverage before they knock down your door. Your financial coverage might be exhausted in a single instance, but your unpredictable medical woes? Perhaps not. In such a case, it is better to have a financial safeguard by way of adding a restoration benefit to your policy. 

What is a restoration benefit?
If you think of your health policy as a glass of water, the restoration benefit is the jar which refills it when it’s empty. Just as the name suggests, a restoration benefit allows you to fully reinstate the basic sum insured of your policy after it’s exhausted.

Depending on your insurer, the full policy sum insured might be restored only once you have used the entire amount. This is known as complete restoration. Otherwise, your sum insured might be fully restored even if you’ve made claims on partial or only some portion of your sum insured, which is known as partial restoration. 

Wondering how this restoration might have helped Nitesh? Let’s assume the total sum insured (SI) on his family floater insurance is Rs 20,00,000. Here’s how his finances would be in both situations: 

Moreover, if Nitesh’s policy offered partial restoration, his sum insured would go back to Rs 20,00,000 from Rs 15,00,000, after his claim for his son’s treatment. 

Notes personal finance expert Viral Bhatt, “Restoration benefit is a valuable add-on to a health insurance policy, because it provides financial protection in case you have to make a claim and you have already exhausted your sum insured within a policy year. It offers financial assistance in case of multiple hospitalizations or a serious illness”. 

What are the caveats? 

Experts note that restoration is increasingly becoming a default feature in most policies, which is why it does not impact the amount of premium paid, but rather your claim experience. It is a must-have when you are taking a family floater plan i.e. insuring all your family members under a single plan. However, it is not as simple as it looks. 

For instance, take the Aditya Birla Health Platinum Enhanced plan. It offers 100% restoration of the basic sum insured, only once a year. While that may seem good, the policy does not cover OPD treatments, nor will the sum insured reloading apply to your first claim made under the policy, unless it’s for a road accident. 

Moreover, say your policy offers an SI of Rs 1,00,000. You end up in hospital due to diabetic symptoms, and claim Rs 1,00,000 for the treatment. Now, if 3 months later, another member of your family is admitted for diabetes, the SI of Rs 1,00,000 will not be reloaded for them. In short, you’ll be on your own. 

Also, you cannot carry forward your reloaded sum insured. This means that if you do not use the restored sum insured within a year, you will not be able to avail its benefits the next year. 

Under some policies, co-payment is also mandatory. This means that irrespective of the sum insured, the insurer’s liability to pay towards the claim made will be limited only to a predetermined percentage. The rest will be on you. In some cases, this co-payment can go up to 25%

Similarly, the Niva Bupa ReAssure 2.0 Health Insurance comes with waiting periods, within which the insurer will not bear any liability for your medical concerns. This extends to 36-48 months for your pre-existing diseases, and 24 months for some specific conditions like cataract, hernia, benign tumors, joint replacement and more. However, it allows for carrying forward the unutilized SI to the next policy year in some cases. 

The HDFC Ergo Optima Restore Health Insurance offers SIs between Rs 3 and 50 lakhs. However, unlimited restorations are an optional benefit. It only begins covering pre existing diseases only after 3 years. 

HDFC Ergo:  SI @ Rs 5,00,000. Discount @ 55% offered
Source : Company Websites/Policy wordings