Should You Consider Restoration Or No Claim Bonus As A Core Part Of Your Coverage?
While health insurance is necessary, buying adequate health insurance coverage is even more critical. India, in fact, has a big problem with respect to low health insurance coverage.
So while calculating adequate health insurance coverage one should take into account two things:
That the real usage of this policy is going to be when you’re older - say 50 and above.
That it is unwise to have a low coverage, and depend on upgrades in the future, because approval of upgrades is not automatic and would depend on the age and the medical history of the family covered.
We have covered adequate coverage extensively in a separate article
Now that we have understood the importance of high coverage, there is another question that crops up. Most policies offer very high no claim bonuses, as well as advanced versions of reinstatement of coverage benefits. In this light, is there sense in taking a large coverage or should one depend on such benefits for adequate coverage? For instance, say the adequate coverage for an individual is 15 lakhs, what if this person buys a 5 lakhs plan with a no claim bonus that goes upto 100%. In this case, the cover becomes 10 lakhs in say 2-10 years time. Plus, say if this policy has a restore feature, the cover depending on terms and conditions will reinstate when exhausted to the base sum insured, adding another 5 L
So the question is Rs. 5L base + 5L of NCB + 5L of Restore = 15L of base coverage?
Let’s find out!
How Does It Work?
If you get hospitalised during a policy year and use the health insurance sum insured, the Restoration Benefit feature gets triggered. It replenishes the sum insured by a certain percentage.
Please note that the restored sum insured can be used only during the policy year, it cannot be carried forward to the next year.
For instance, Kaustav bought a health insurance plan with a sum insured of Rs. 10 lakhs. He got diagnosed with cancer and used his entire sum insured to cover the treatment expenses. Later that year, he got hospitalised again due to diabetes related complications. He incurred a medical expense of Rs. 1 lakh. Without a Restoration Benefit in the policy, his health insurance shall not cover the second hospitalisation. But since he did have the benefit added, the succeeding hospitalisation, too, got covered, relieving him of financial strains.