Restoration Benefit in a Health Insurance Policy

Rahul had a sudden heart attack and had to undergo an emergency angioplasty. Earlier that year, he injured his knee while cycling and underwent surgery. Rahul was confident that his health insurance policy will cover his angioplasty cost in spite of the fact that his policy paid for his knee surgery earlier. But he was disappointed that his health insurance policy failed to pay for his angioplasty because he had exhausted his claim amount in that policy year. This was because he had not opted for the restoration of sum insured benefit in his health insurance policy.

Restoration benefit is an add-on feature in health insurance policies that offers an additional sum insured after the original sum insured is exhausted in a policy year. 

This blog looks at the restoration benefit in detail and the conditions and clauses associated with this feature in a health insurance policy.

Restoration of sum insured

After purchasing a health insurance policy, one can have peace of mind knowing that emergencies or serious health conditions can be managed without causing financial strain. However, a sudden illness requiring specialized and costly treatment may quickly deplete the insured sum, leaving no coverage for future claims within the same policy year.

In such cases, restoring the sum insured to its original amount is the best solution. Fortunately, many health insurance policies offer a restoration benefit. This add-on feature replenishes the insured sum once it has been exhausted, ensuring continued financial protection throughout the policy year.

This benefit is alternatively known as the refill benefit. It can be useful in case there is a need of a second hospitalization in a single policy year. 

How does restoration benefit feature work in health insurance policies

Sum insured is the maximum amount payable in a health insurance policy. Sum insured takes care of the hospitalization expenses along with the doctor’s fee, room rent, medical procedures etc. Restoration benefit restores the sum insured of the health insurance policy, to its original limit after it gets exhausted following a claim. This benefit is available for individual and group policies. This benefit is useful when there is a second hospitalization within a single policy year. 

Restoration benefit is particularly useful under a floater policy where all members of a family are covered and a single sum insured floats between all the family members.

Type of restoration benefit in health insurance

Two types of restoration benefits are available  based on the amount of exhaustion of the sum insured:

Complete Exhaustion: This kind of restoration benefit kicks in only once the whole amount insured has been depleted. A restoration benefit is typically provided for the full depletion of the sum insured under most health insurance policies.
For instance, if a Rs. 4 lakh claim is filed under a Rs. 5 lakh amount insured health plan, you will receive the remaining insured amount of Rs. 1 lakh upon claim payment. But the restoration benefit will not be available in the event of a second claim filed during the same insurance year. In case your remaining sum insured is exhausted, only then the restoration benefit is activated.

Partial Exhaustion: In the event that only a portion of the sum covered is exhausted, the restoration benefit is still applicable. This kind of a top up benefit is the better option when it comes to coverage utility.
For instance, if you make a claim of Rs 4 lakh against your total sum insured of Rs.5 lakh, you will be left with Rs. 1 lakh. However, the restoration benefit would come into effect and the insured amount would be raised to Rs 5 lakh, ready for any additional claims in the future.

Most of the insurers offer automatic restoration of sum insured if you have used a part of the Sum Insured during the policy year and the Sum Insured falls short to cover a subsequent illness / treatment in the same policy year then the automatic restoration of sum insured will takes care of it. In most health insurance policies with this benefit, there is no minimum or maximum sum insured to avail this benefit.

Some insurance companies increase the premium amount for the restoration benefit while some charge the same premium for this additional benefit.

Special features of restoration benefit in a health insurance policy

• Restoration benefit applies to every sum insured.
• Restored sum insured cannot be carried forward to the next policy year, even if it is not used in the policy year when it was restored.
•  The entire sum insured is reinstated, even if it is exhausted in a single claim within the policy year.
•  The restoration benefit applies to any sum insured, not just higher coverage amounts.
• Restoration benefits are applicable only for future claims and do not apply to the first claim made in a policy year.
• This feature is particularly valuable in a family floater plan, ensuring continued coverage for family members once the base sum insured is exhausted.
• Only one person can avail of the restoration benefit at a time under the policy.

Advantages of restoration of sum insured in health insurance

• Additional sum insured is available under the policy within the same policy year.

• Extra coverage without paying an additional premium.
• Helps you stay prepared for any medical emergencies without the fear of facing shortage of funds for paying any medical claim.
• Health insurance plans with in-built restoration benefits help you get extra coverage without paying any additional premium.

This benefit is especially valuable for families with members who have recurring illnesses and require frequent medical attention. In case they have a health insurance policy without the restoration benefit and if the insured sum is fully utilized any further claims will be inadmissible.  There will be no coverage for additional medical expenses until the policy renews.

The restoration benefit acts as a safeguard in such situations, replenishing the insured sum and providing financial relief for unexpected health issues, ensuring continued protection throughout the policy year.

Restoration benefit feature in health policies offered by insurance companies

Most insurance companies in India now offer the restoration benefit feature in their health insurance policies but one must be aware of the conditions attached to this benefit. Since this is an add-on feature it will require payment of additional premium.

Restoration benefit in health insurance is applicable under certain terms and conditions. They can vary based on the type of restoration offered. So, before purchasing a health insurance plan with restoration benefits, do consult an insurance broker .Understanding policy terms and conditions is significant to avail benefits under the policy and for optimum coverage.

We at Zen insurance assist in choosing the right Insurance cover to suit your needs. Please contact us for assistance.

 Disclaimer:    

 Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.