Restoration Benefit in Health Insurance

The costs of medical treatments are on the rise. Even if you purchase a health insurance policy to cover the same, a single hospitalisation might deplete the sum insured. If this happens, you will be left without a cover for the rest of the year. This is even more stressful if you have a family floater plan - your family members will be left without a cover. A subsequent hospitalisation within the same year will have to be paid for from your own pocket!

But but but…there is a workaround. You can get your health insurance cover health insurance cover ‘refilled’ under a feature called the Restoration Benefit. In the face of an unexpected medical crisis, this is an ideal way to add an extra layer of protection for yourself and your family.

Let's see what a Restoration Benefit is - in detail.
 

So, What Is A Restoration Benefit?

During the policy term, when the sum insured limit is exhausted, it can be restored under the Restoration Benefit. This can be done either once a year or within the limitations stated in the policy terms.

For instance, Lal purchased a health insurance plan with a sum insured of Rs 10 lakhs. After being diagnosed with kidney failure, he used his entire sum insured for treatment expenses. He got hospitalised again for a heart problem within the same year, incurring a medical expense of Rs 5 lakhs. In this case, his health insurance shall not cover the second hospitalisation if he does not have the Restoration Benefit. So, he will have to foot the bill himself.

From the above example, it's evident that if your insurance policy offers a restoration benefit, the cost of any succeeding hospitalisations shall be covered by your health insurance up to your base sum insured, relieving you of any financial strain.
 

What Are The Features Of The Restoration?

• Restoration Trigger

  The restoration benefit kicks in when your base sum insured along with any accrued bonuses are exhausted in a given year. However, in some products, the Restoration gets triggered when the base sum insured gets partially exhausted, i.e., when a specific limit is reached.

• Restoration Limit

  In accordance with the policy's limits, a certain percentage of the sum insured can be refilled each year. Usually, a refill of 100% of the sum insured is applicable.

• Treatment Coverage

  Several insurance companies allow you to use the restoration benefit only for conditions that are totally unrelated to the medical condition for which you had been hospitalised previously. Similarly, a family floater policy may have a restriction wherein the restoration benefit cannot be used by the same person/same condition twice a year.

• Number Of Restorations

  The Restoration Benefit triggers once every policy year. However, some plans come with an unlimited restoration benefit. In either case, the maximum amount you can claim for any hospitalisation is limited to your base sum insured and any accrued bonuses. Furthermore, once the restored sum insured is triggered, it will expire every year, and there is no way to carry over the restored sum insured to the next policy year.

• Additional Conditions

  Certain policies restrict the use of restorations in the first claim or first hospitalisation.

What Should You Look For In Restoration?

There are certain things to consider before opting for a Restoration Benefit -

• Must Apply To Related Illnesses

  Some policies state that restoration benefit can only be used for conditions not related to the one you were treated for previously in the same year. However, if you are hospitalised for a long-term illness that requires several hospitalizations, this condition will prove to be a major issue. Hence, you will have to bear the cost of the subsequent hospitalizations yourself.

  Let's understand this better with the help of two scenarios -

  Example 1:

  Manav has a health insurance policy with a sum insured of Rs 10 lakhs. His restoration benefit is limited to unrelated diseases. Upon being diagnosed with colon cancer, he underwent surgery, and surgery costs exhausted his entire sum insured of Rs 10 lakhs. So, once he made a claim, the Restoration kicked in and refilled the sum insured.

  Example 2:

  Mahesh has a health insurance policy with a sum insured of Rs 10 lakhs. His policy includes a restoration benefit applicable to related claims. He undergoes liver surgery, and uses his entire sum insured for the surgery expense. So, once he makes a claim, the Restoration shall get triggered and refill the sum insured.

  Let’s compare both the scenarios -

  How does restoration work in Manav’s case?	How does restoration work in Mahesh’s case?
  Due to the restriction on related claims, Manav cannot use the restored sum insured for the subsequent chemotherapy session he needs in the same policy year.	If Mahesh needs further treatment for his liver during the same year, the restored amount will be available to him.

• Must Get Triggered For Partial Exhaustion

  As mentioned earlier, the restoration occurs in some policies when the base sum insured is completely exhausted. In others, the restoration kicks in when the sum insured is partially exhausted. It is recommended that you always opt for partial exhaustion so that you have enough cover for the subsequent hospitalisation needs.

  Let's understand the concept with examples -

  Case 1:

  Meera purchased health insurance with a sum insured of Rs 10 lakhs. The restoration trigger is set at partial exhaustion of the sum insured. She undergoes a heart surgery, which costs Rs 5 lakhs.

  Case 2:

  Megha purchased health insurance with a sum insured of Rs 5 lakhs. Her restoration trigger is set at the complete exhaustion of the sum insured. She undergoes a knee surgery, which costs Rs 2 lakhs.

  Case 1: Restoration on Partial exhaustion	Case 2 : Restoration on full exhaustion
  Once Meera uses up Rs 5 lakhs, the insurance sum is restored to Rs 10 lakhs. Meera shall have a sum insured of Rs 10 lakhs on hand for the next hospitalisation.	There will be no restoration in Megha's policy as the entire sum insured of Rs 5 lakhs has not yet been exhausted. In the event that she needs to undergo another hospitalisation, Megha will be covered for 3 lakhs.

• Must Have Unlimited Restoration Benefit

  There are health insurance plans that allow you to restore the sum insured only once during a policy year. And, some health insurance plans allow unlimited restorations. Therefore, look for a plan that allows unlimited restorations. When you need multiple hospitalizations within a policy year, this will prove to be valuable.

What Are The Drawbacks Of Restoration Benefit?

It is also important to know the limitations of the Restoration Benefit -

• Can Be Utilised Only Once For Critical Illnesses

  In the case of critical illnesses like cancer, heart disease, etc., restoration benefit can be used only once in a lifetime.

  For example, Raj suffers from chronic heart failure, and he needs two valve operations. During the first surgery, his sum insured gets exhausted, and consequently, it gets refilled. In the event he requires another surgical procedure after the second surgery, the sum insured shall not be refilled.

• Restored Sum Assured Will Not Cover Specific Illnesses

  Some policies stipulate that the restored amount cannot be used to treat certain listed illnesses in the policy. If the policy you have has such a provision, it means that you will not be able to draw from the restored sum insured if you undergo hospitalisation for treatment of certain conditions enlisted in the policy document, such as kidney failure, cancer, and heart attack, etc.

• Restoration Up To The Claim Amount With Additional Premium

  It is true that some health insurance plans offer Restoration only up to the claim amount, but not up to the sum insured. An additional premium shall be charged for this service. Upon refilling your base cover, the premium will be deducted from your claim. Premiums are calculated pro-rata according to the proportion of claims to the basic sum insured and the annual premium.

• Not All Benefits Are Covered

  Certain policies limit the use of the restored sum insured to inpatient treatment costs only, such as surgery costs, ICU charges, room rent etc. It is not possible to use the restored sum insured for other benefits, like pre-hospitalization (diagnostic test costs, consultation fee, etc.) and post-hospitalization costs (check-up fees, diagnostic test costs, etc.).