How you can use the restoration benefit in your health insurance policy

Recently, a 35-year-old professional, Vikas, found himself in serious trouble. He had to undergo a sudden heart operation which cost him Rs 4 lakh. Even as he recovered, his wife Reena was diagnosed with Covid and she needed hospitalization – the bill for which was around Rs 3 lakh. While their family floating plan only had coverage of Rs 5 lakh, what got them through this tough time was the financially wise decision to opt for the unlimited dining benefit. Thanks to this benefit, the depleted sum insured was replenished and the family did not have to pay hospital costs. In addition, the family is always financially prepared if an additional need for hospitalization arises during the insurance period.

While awareness around health insurance has gained significant momentum – particularly post-pandemic – there are several benefits for improving policyholder protection that remain even lesser known. One of them is the restore perk. To put it simply, the restoration benefit helps restore the original sum insured amount in case it runs out during the term of the policy. This feature, which comes with an additional premium, is particularly popular among those opting for family floating plans, as it offers to cover multiple hospitalizations.

While this benefit is a feature built into most comprehensive plans, let’s understand how it has evolved in recent times to provide the ultimate layer of protection for the policyholder.

Before we get into the evolution of restoration benefits, it’s essential to understand the basics of how it works. Basically, there are two types of restoration benefits – full and partial exhaustion. As its name suggests, the first is only triggered when all of your insured capital is exhausted in a single claim, and the second allows you to benefit from the benefit even if only part of your insured capital is exhausted.

If we talk about the case of Vikas and Reena, if they opt for complete exhaustion, the benefit will not be triggered as the heart surgery only used Rs 4 lakh out of Rs 5 lakh. Here, the partial depletion option works better as it will allow them to claim the amount for both times. However, the feature has expanded its coverage to provide maximum protection.

The pandemic has been hard on people all over the world and India is one of the worst affected countries. Even if the virus continues to mutate and cause recurring waves, it is still advisable to add an extra protective cover. Covid comes with several complications, some of which might not be immediately detected. This is where this benefit comes to the rescue of the insured. Here is how it has evolved to meet the needs of the insured –

  • One-time restoration – Previously, the policyholder had the option of a one-time restoration. This essentially meant that the policyholder could claim additional hospitalization as part of the recovery benefit after exhausting the sum insured during the period of insurance. However, this came with the condition that the second case of hospitalization not be for the same illness.
  • Unlimited restoration for different members – After that, the benefit expanded to provide more protection. Under this, the sum insured could be replenished an unlimited number of times during the policy year. But hospital costs would only be covered if different members were to be admitted and treated.
  • Unlimited Restoration for Same Person But Different Illnesses – Eventually, policyholders were offered the benefit of returning their sum insured an unlimited number of times even if they claim it for the same person but different illnesses.
  • Unlimited restoration for the same illness for the same person – In addition, the restoration benefit has become more comprehensive to accommodate an unlimited number of hospitalizations for the same person and the same illness during the term of the contract.

Being able to reinstate the sum insured in the event of repeated hospitalization for the same or different illnesses is what provides the ultimate protection to the insured. Several insurers offer this benefit.

Exclusions to watch out for

While these benefits make your health insurance comprehensive, there are also a few exclusions you should be aware of –

  • The catering benefit is not like the sickness premium and cannot be carried forward even if it is not used during the insurance year.
  • The recovery benefit is not triggered in the first case of hospitalization, even if the costs exceed the sum insured. For example, if you have Rs 5 lakh coverage and your first hospitalization is Rs 7 lakh, you have to bear the additional costs.
  • Do not view the restoration benefit as a replacement for your sum insured. Always opt for a high sum insured.

The author is the head of health insurance, PolicyBazaar.com, a financial aggregator.

(Warning: The opinions expressed are those of the author and Outlook Money does not necessarily endorse them. Outlook Money will not be liable for damages caused to any person/organization directly or indirectly.)

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