Decoding Restoration Benefit in Health Insurance

Medical insurance is a necessity these days. However, escalating costs and chronic diseases that require prolonged treatment can sometimes make health insurance coverage inadequate. For example, you might have coverage of ₹5 lakh, but the overall hospital bill in a year is ₹9 lakh. To deal with this scenario, a ‘restoration benefit' is included in a health insurance plan or policy. Let's discuss this in detail.

What is the restoration benefit?

The restoration benefit is a health insurance add-on(which can be added to your policy by paying an additional premium) that gets activated when the sum insured of your base policy is completely utilised. This feature is handy for those dealing with multiple health conditions. However, a few health insurers include a clause in this rider stating that you can use restoration benefits only for illnesses for which you have yet to make a claim within the policy year.

How does restoration benefit work?

To understand this rider, let's take an example.

Suppose you have purchased a standard health insurance policy with a sum insured of ₹10 lakhs and supplemented it with a restoration benefit rider of the same amount. The insurer includes a clause stating that the restoration benefit can be used for different illnesses.

A few days after buying the coverage, you suffered a heart attack that required a heart transplant. Doctors provided an estimate of ₹9 lakh. You underwent the surgery, and the insurer settled the full amount directly to the hospital.

After two months, you complain about several concerns. Following your diagnosis, it was found that you were suffering from another heart condition coupled with a gastrointestinal disease. The treatment costs ₹6 lakh, of which ₹1.5 lakh is related to the heart.

In this case, the restoration benefit will kick in, and the settlement will be as follows:

• ₹1 lakh from the base plan
• ₹3.5 lakh (gastrointestinal treatment amount) from the restoration rider
• ₹1.5 lakh (heart treatment amount) from your own pocket.

Features and benefits of restoration benefit

The advantages of restoration benefit are-

1. Extended coverage
Unlike a traditional plan, where once your original sum insured is exhausted, you need to pay the entire treatment cost out of your own pocket, the restoration benefits rider offers extended coverage by taking care of medical expenses that exceed the base plan's sum insured.

2. Tenure basis
Restoration benefit is provided once a policy year and only after the original sum insured has been exhausted. You cannot carry forward the restored sum insured to the following year.

For example, in a long-term policy with ₹10 lakhs coverage, if you exhaust the entire base sum insured with your first claim, you receive ₹10 lakhs as restoration. If no further claims are filed that year, this restored sum insured will lapse once the policy year ends.

3. Family floater
In a family health insurance plan, the reinstatement amount is shared among the covered members. For example, suppose one of the four covered members uses ₹6 lakhs from the restored sum insured of ₹10 lakhs after exhausting the original sum insured. In that case, another person can use only the remaining ₹4 lakhs during an emergency.

4. Applicability
You can use the restoration benefit to cover treatment only in India, not abroad.

Things to consider when buying a health plan with restoration benefits

• Check the terms and conditions associated with the plan. See if there is any waiting period. Also, review the list of conditions that your insurer does not cover.
• Go through the list of network hospitals. These are the healthcare establishments where you can get treatment without paying cash up front and then waiting for reimbursement. Ensure the network hospital is within the proximity of your residence and workplace.
• Check if the premium aligns with your budget. If you are young and indulge in an active lifestyle, you may skip purchasing the restoration benefit rider.

Who should consider the restoration benefit?

1. In a family health insurance plan, the sum insured is shared; therefore, the exhaustion of the same within a few months of the policy year is possible. Hence, if you have a family floater plan, opting for this coverage becomes crucial, especially if the policy covers a senior citizen.
2. If you are dealing with multiple illnesses or a chronic ailment and your condition requires frequent hospitalisation, getting this coverage is wise.
3. If your base sum insured is lower, you can purchase this rider to handle any major medical crisis.

Conclusion

The restoration benefit in health insurance is a valuable feature that provides additional coverage when your base sum insured is exhausted. This add-on protects you from high medical expenses due to prolonged or multiple health conditions. Understanding its terms and benefits allows you to make more informed decisions about your health insurance needs and secure comprehensive protection.

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