How Does Restoration Benefit Work in a Health Insurance Policy?

In a health insurance policy, restoration benefit is a feature that replaces the entire sum insured if it is spent already during the policy period. Be it the increasing medical inflation or the possibility of spending all your sum insured for a one-time hospitalisation is quite a reality these days. This is precisely when the restoration benefit feature in a health insurance policy comes in handy. A restoration benefit feature is an in-built option in most comprehensive health insurance policies.

With the restoration benefit, you will be able to include an additional layer of protection when a medical crisis arises for yourself or your loved ones. This feature will act in favour of individuals who go for family floater plans. This feature works particularly for family floater plans as the sum insured is shared amongst the entire family. The benefit would extend coverage towards hospitalisation expenses of more than one family member.

What are the Kinds of Restoration Benefits?

1. Complete exhaustion – This particular restoration benefit comes into existence only when the entire sum insured is spent. If the total sum is not yet exhausted, the benefit will not get activated, and as a policyholder, you will need to pay the balance amount from your pocket. For example, you have an insurance cover worth Rs 6 lakh, and your surgical operation costs Rs 5 lakh. Now, in case you require Rs 2 lakh extra for a separate claim in the same year, the restoration benefit feature will not get activated since your original sum insured is not spent entirely yet.
2. Partial exhaustion – You can avail this particular restoration benefit even when some of the sum insured amounts is used. A few insurers cover a second claim amount even when a little amount is left out of your sum insured. Here, the benefit will get activated when there is partial exhaustion of your sum insured. Hence, your second claim will get covered even when you have Rs 1 lakh left in your original sum insured.

Before selecting the restoration benefit, you need to factor in your family history as it is an important deciding factor. Also, you will need to check with your insurer regarding the terms and conditions concerning both these benefit types and choose the one that suits your needs the best.

Factors to Consider Before Choosing the Restoration Benefit

• With the restoration benefit, your premium will be costlier. Hence, make sure you ask the insurer how this benefit will affect your premium.
• The restoration benefit will get activated and will be relevant only for unrelated medical expenses. If you spend all your sum insured amount on a heart-related surgery, then the restoration benefit will not give coverage for a second heart-related surgery claim in the same year. You need to get clarity from your insurer about the kind of claim they will provide coverage for and the portion of restoration benefit covered.
• Ask your insurer regarding the pertinent conditions applicable for the same or different illnesses concerning different family members.
• Usually, the restoration sum insured will not get carried forward to the following year even when you don’t utilise it until its validity.
• Ask the insurer if the benefit will get activated when the sum insured is spent via a single claim or activated even when there are multiple claims.

Lastly, please do not rely on the restoration benefit entirely when it comes to your protection. You could also go for a higher sum insured to ensure your plan can meet all your medical emergencies.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in