Health Insurance: What are restoration benefits and why do they matter?

If you are planning to buy a health insurance policy for yourself or your family, apart from the regular check-lists of ‘must-have’ options, you should choose a plan that offers restoration benefits. With the surge in medical inflation, the availability of restoration benefits in a policy can become a shield against astronomical medical bills.

Restoration benefits allow you to make claims over and above the sum insured under the same policy. The sum insured gets replenished after the limit is fully utilised. Here is a guide on and how restoration benefits work in health insurance policies.

What is a restoration benefit?

A restoration benefit is essentially an automatic top-up that comes with your policy. On a sum assured of say ₹10 lakh, you can claim an additional ₹10 lakh if you had chosen a regular restoration benefit in your policy. The restoration benefit can help you by refilling the health insurance policy if it gets fully used by one family member.

While several insurers charge extra premium for the restoration benefit, some do not levy any additional premium. To avail the restoration benefit, there is no need that the sum insured should be a high amount.

Insurers now offer even unlimited restoration benefits wherein the sum insured is refilled each time it gets exhausted. For instance, if you have a ₹10 lakh policy and have exhausted it, you can claim say ₹20 lakh, ₹30 lakh or even higher under unlimited restoration benefit. But you have to pay additional premiums for getting an unlimited restoration benefit.

Under normal policies, claims are paid only up to the sum insured amount. A ₹2 lakh policy with no restoration benefit will pay only to that extent. No claims will be entertained by the insurer beyond this limit. But with a restoration benefit you can continue to claim even if the limit is used.

“The restoration benefit in health insurance is a feature that can reset the sum you insured back to its original limits once you use it due to a claim. If your health insurance claim amount is finished, it will be refilled to its full value,” according to Future Generali Insurance.

Restoration benefit plays a significant role in family floater plans, where the sum insured is shared by all the family members. The chances of the entire sum insured getting exhausted among the family members is high under floater plans.

“Restoration benefit works wonders in floater policies. If restoration benefits are available, all the persons in the family can make claims in the same year without worrying about whether the sum insured will be exhausted,” according to Star Health Insurance.

What are the types of restoration benefits?

There are mainly two types of restoration benefits. They are: Complete exhaustion and partial exhaustion. Insurers offer full restoration benefits once, specified times (say 3 times a year) and unlimited options depending on the policy.

Complete exhaustion: Under this, your restoration benefit will kick in only if you have exhausted the entire sum insured. This type of benefit is offered by most health insurers. In most cases, premiums for the complete exhaustion option are also affordable. It is also a good back-up for medical emergencies.

Partial exhaustion: This option offers flexibility for the insured. Partial exhaustion can be activated even if the sum insured is still left unused.

Does it come with conditions?

A restoration benefit, like most other features in health insurance, comes with a host of conditions. The most important condition is that you will not be able to carry over the restoration benefit from one policy year to the next year. If you do not use it in one policy year, you will lose that amount.

Another key condition is that only one person can use the restoration benefit at a time. Multiple family members cannot use it at the same time. Also, the restoration benefit cannot be used to make the first claim in any policy year.

Insurers also have extra conditions in regular restoration plans such as clauses that state that the insured can use the restored benefits for the same illness only after a gap of 45 days. This means that if the first claim in the year was for a heart disease, the insured can use the restoration benefit for a similar disease only after a gap of 45 days. Such conditions, however, are not applicable to plans that offer unlimited restoration benefits. So, it will be better if you opt for unlimited restoration benefits.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.