Do you know what is restoration benefit in health insurance? What are the loopholes in restoration benefits? Should you rely on such benefits?
Many terminologies are commonly used in health insurance which we never take seriously and ignore by looking randomly rather than going into deep. One such feature is the restoration benefit in health insurance.
What is the restoration benefit in Health Insurance?
Let us assume that Mr.Ajay has health insurance coverage of Rs.5 lakh. Unluckily he was diagnosed with cancer. The treatment cost him Rs.5 lakh and the entire health insurance was exhausted because of this treatment.
After few months, again he was diagnosed with heart-related ailment. For this, he has to spend Rs.2 lakh. Luckily while buying health insurance, he opted for restoration benefit. Hence, even though due to his cancer hospitalization the entire sum assured was exhausted, the health insurance company restored the sum assured and hence he is able to claim the Rs.2 lakh hospitalization expenses of heart-related ailment.
If this feature was not there, then he was forced to pay Rs.2 lakh from his own pocket.
Types of Restoration Benefits in Health Insurance
There are two types of restoration options available. You must understand first which of these your health insurance company is offering you.
- Complete exhaustion of the Sum Insured – In this option, the benefit will come into force only when the entire sum insured is exhausted.
- Partial exhaustion of the Sum Insured – In this option, the benefit will come into force even with partial exhaustion of the sum insured.
Advantages of Restoration Benefit in Health Insurance
# This will be handy, especially for family floater plans. Suppose in a group of 4 members, one family member is hospitalized and the entire sum insured is exhausted. Then if unluckily another member of a family is hospitalized after few months, then during this period, this restoration benefit comes as rescue for a second hospitalization.
# Restoration benefit refills the sum insured up to the base policy cover by a certain % – usually 100%.
Disadvantages of Restoration Benefit in Health Insurance
# Because of this feature, you may have to pay a higher premium than the one which does not offer such a benefit.
# Restoration benefits in health insurance are usually not applicable for the same disease. Suppose someone is hospitalized for Cancer treatment and after few months he or she has been admitted for cancer treatment, then this restoration benefit in health insurance is not applicable. However, few insurers may provide restoration benefits for the same illness with a gap of 30-45 days of hospitalization by charging you a higher premium.
# Restoration benefit is for future hospitalization but not for the same hospitalization. Let us say Mr.X has health insurance of Rs.5 lakh. He was hospitalized and the bill amount was Rs.8 lakh. In this case, he will not get the benefit of restoration as his insured amount was exhausted. Mainly because restoration benefit is for future hospitalization but not for the same disease and same hospitalization.
# The total sum insured is restored only if the entire sum insured is exhausted under a single claim. But there are also some health insurers who offer the restoration benefit as soon as there is any hospitalization required. Ideally, it is better to opt for restoration benefit which is refilled without exhaustation of the sum insured.
# There are also some plans which can be restored unlimited times in the policy year. There are few who have restrictions for such numbers.
# In few policies restoration benefit is activated only once in a lifetime for critical illnesses like cancer or kidney failure. Check for such restrictions in your policy.
# There may be a condition that the restored amount cannot be used for certain listed illnesses in the policy document. Hence, check the restricted diseases list for this restoration benefit.
# You cannot carry forward any unutilized restoration benefits to the following year.
Conclusion – Even though in plain it looks fantastic, but never rely on restoration benefit fully. Instead, it is always better to have a good amount of base and super top-up health insurance. Mainly because let us assume that restoration benefit under your health insurance policy offers you unrelated hospitalization, full utilization, and unlimited times in a year. But do notice that the maximum coverage is the sum insured you have opted for under the policy. What if you exhaust the sum insured? You have to pay it from your own pocket. Hence, let us opt for this benefit but never rely on such an addon.