These days many insurers offer restoration benefits along with their insurance policies. Let’s find out more about them.
In recent times, insurance companies have been coming up with a whole bunch of benefits to woo their customers and make their offerings more compelling. One of these is the oft-misunderstood benefit of restoration cover. If you already have a comprehensive Health Insurance policy in place and believe that you’re equipped to tackle any medical emergency, you may be ignoring one real possibility. For instance, what happens if you need to make a claim for the second time in a policy period after you’ve exhausted the entire sum insured for that year?
Your insurer won’t pay up for sure. A comprehensive Health Insurance plan provides coverage only up to the sum insured. Your insurer will bear expenses right up to the amount that you are entitled to under the plan but is not liable to compensate for a second claim. So what options do you have if you don’t want to dip into your savings or take a loan? Let’s find out more.
What Is Restoration Cover?
A ‘restoration cover’ also known as a ‘refill option’ is a benefit that insurers offer with comprehensive Health Insurance plans, both for an individual as well as family floater covers. In most cases, it will be available as an add-on to your existing policy but some insurers even insert them into a policy.
If you already have a comprehensive Health Insurance plan, you could get this ‘restoration cover’ as an add-on benefit. This will come in handy in case of a second hospitalisation within the same policy year, and your original sum insured will be restored as soon as you exhaust your original cover.
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Let’s take a look at the pros and cons of this benefit:
Pros Of A Restoration Benefit
As we mentioned earlier, one of the biggest advantages of a restoration benefit is that in case your entire sum insured has been exhausted and there is a repeat hospitalisation during the policy year, your sum insured will renew automatically. This renewal will happen without the need for you to pay additional premiums or wait until the renewal date.
But a valid question to ask here is if you’re going to need this benefit at all in the first place. You might not need it for an individual cover, but for a family floater having this restoration benefit will be a great advantage. In the absence of a restoration benefit, if one person exhausts the entire sum insured, the other members in the family will be left with no health coverage for the rest of the policy year. With the restoration benefit in place, your sum insured will be replenished automatically.
What Are The Types Of Restoration?
A restoration benefit can be of two types – one that will kick in when there is total exhaustion of your sum insured and the other when there is partial exhaustion. Let’s take a look:
The first kind of restoration benefit, as explained earlier, kicks in only when you’ve completely exhausted your entire sum insured. This includes the no-claim bonus as well. For instance, if your total sum insured is Rs. 50 lakhs and your first claim were for Rs. 10 lakhs, you will still have Rs. 40 lakhs of the sum insured left. Thus, in this case, your restoration benefit won’t kick in unless you exhaust the residual Rs. 40 lakhs amount.
On the other hand, if your hospitalisation expenses overshoot your Rs. 50 lakhs cover by Rs. 3 lakhs, you’ll have to pay for those extra Rs. 3 lakhs out of your pocket. But suppose you are hospitalised again for some other ailment during the course of the year, your sum insured will be restored to Rs. 50 lakhs again, even though you’ve exhausted the entire amount because of previous hospitalisation. Thus, this kind of restoration benefit, applicable only on future claims, is not applicable for the first claim and cannot be availed in the same claim.
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The second kind of restoration benefit which involves the partial exhaustion of the sum insured comes into play even if the sum insured has only been partially exhausted. In order to avail this benefit, you don’t need to exhaust the entire sum in one claim to avail the restoration benefit.
Thus, if your health insurer is offering this benefit, find out what type of benefit it is. One thing to remember here is that insurers also make tweaks often. With some plans, there is no limit to the number of times the benefit comes into play in a policy year.
Restoration benefits often come in two forms – sometimes, they are built into the same policy, but mostly it is an add-on. And thus like any ‘add-on’, it comes at an extra cost or premium. In most cases, the extra premium depends on the term, plan type, and of course, the insurer.
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Conditions Of Restoration:
For a restoration benefit to kick in, there is one condition that needs to be met: the medical condition/illness for the second hospitalisation cannot be related to the medical condition for the first one. Thus, it cannot be applied to the same illness. However, some insurers do allow restoration benefit for the same illness with a waiting period of one or two months. However, they might charge a premium for this. This benefit also cannot be carried forward if it is not exhausted in the same policy year of restoration.
Restoration Benefit In Family Floater Plans:
Restoration benefits come in handy especially in family floater Health Insurance plans. This is because this benefit ensures that other members of the family covered under the plan are not left financially vulnerable if one of the members has exhausted the sum assured. For example, in the case of an accident which has caused injuries to multiple members of the family covered under the same plan, the restoration benefit will raise the sum insured by multiplying the original sum with the total number of people who’ve been injured. So, if the sum insured is Rs. 5 lakhs and 3 members of the family have been injured, then the sum insured will be raised to Rs. 15 lakhs.
Restoration benefit doesn’t necessarily come into play only on health covers of a large amount. It works on any amount and is applicable for both family floaters and individual health plans.
However, since its applicability differs from one policy to another, you must remember to comb through the terms and conditions carefully and choose a policy that best suits your requirements.
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