Restoration Benefit in Health Insurance

Restoration benefit is a feature offered by some health insurance plans where if your full sum insured gets exhausted on medical bills during any given policy term, the insurer will restore your sum insured back to its original amount. However, this is only applicable to insurance plans that specifically have the restoration benefit added to them. Let’s understand the concept of restoration benefit in health insurance with the help of an example:

For instance, if a medical treatment costs you a total of ₹5 lakh, and your original insurance sum was ₹5 lakh, your insurance balance will be exhausted. However, if you have opted for the restoration benefit while buying your health insurance plan, your insurer will then restore this balance. So a year down the line if you require a follow-up surgery costing ₹3 lakh, the expenses will be covered as your sum insured has been reinstated to ₹5 lakh. Read on to learn more about the restoration benefit in health insurance.

Important Update (Dated May 30, 2024) – Good news for Health Insurance policyholders! According to the Master Circular on Health Insurance Business 29052024 rolled out on May 29, 2024 by IRDAI, insurers are to decide on the request for cashless claims within 1 hour of receiving the request. Also, the final claim is to be granted within 3 hours after the policyholder’s discharge from the hospital. Insurers have been directed by IRDAI to establish necessary systems and procedures for this process by July 31, 2024. The Master Circular on Health Insurance Business 29052024 circular is available here - https://irdai.gov.in/document-detail?documentId=4942918

A Restoration Benefit in health insurance is highly valuable and advantageous. The following are some advantages of purchasing a health plan with the restoration benefit:

• Within the same policy year, you are entitled to an additional sum insured within your policy.

• When purchasing health insurance with built-in restoration benefits, you have more coverage without having to pay a higher premium.

• With a restoration benefit, you can always pay for a health insurance claim and keep ready for any medical crises.

• All family members are covered by restoration benefits in family floater policies with an adequate sum insured for each.

The cost of private healthcare has risen significantly over the past few years. An operation procedure that would cost ₹5 Lakhs around 5 years ago would now cost anywhere between ₹8 ₹10 Lakhs as a result of medical inflation. If you have a long term health insurance with a coverage of say ₹10 Lakhs, your sum insured could get exhausted during a similar medical procedure, leaving you with no extra cover for the rest of the policy term/year. However, if you have the restoration benefit with your health insurance plan, your full sum insured will be reinstated to its original amount once it gets exhausted.

There are two main types of restoration benefits in health insurance. They can be categorised according to the extent of exhaustion of the original sum. The two kinds are as follows:

• Partial Exhaustion

With this type, you can avail the restoration benefit in health insurance even if your sum insured has only been used partially. For example, if your original sum is ₹5 Lakhs and you put forth an insurance claim for ₹4 Lakhs, you will be left with only ₹1 Lakh. Here, the restoration of the sum insured will come into effect and the insurance balance will be restored to the original ₹5 Lakh.

• Complete Exhaustion

In this type of restoration benefit for health insurance, the sum insured will be reinstated only if the original sum insured gets exhausted fully. Almost all health insurance plans offer this type of benefit so that the sum insured in health insurance is restored upon total exhaustion.

Ideally, everyone who purchases health insurance should also get the restoration benefit add-on for extra coverage. However, the following set of people should definitely opt for it:

• People living in high cost of living areas. People who live in metropolitan cities will have to pay significantly higher medical bills for the same treatments when compared to people living in small towns or villages.

• People who are vulnerable to or predisposed to certain diseases should opt for health insurance with restoration benefits as it will allow them to get treatment without worrying about their cover getting exhausted.

• Older individuals should also opt for health insurance with restoration benefits, as the likelihood of older people developing health conditions is much higher than the youth.

• Anyone who feels their insurance cover may get exhausted and that they may need more coverage in the future should opt for health insurance with restoration benefits.

The restoration benefit in health insurance is available in the form of an add-on to your health insurance plan. You can buy it at an additional cost or health insurance premium at the time of buying a new insurance policy or renewing a pre-existing plan. It is considered a valuable add-on for individual and family floater plans; if one member of the family exhausts the base cover, other family members can still benefit from the cover. In order to get the maximum possible coverage at minimum cost, ensure that you opt for the restore benefit in health insurance as part of the policy.

The restoration benefit in health insurance is an ‘add-on cover’ that the policyholder must purchase on top of their base insurance policy. So yes, if you choose to include restoration benefits with your health insurance, you will have to pay a higher premium for it. However, the cost of the restoration benefit add-on will only be a small part of your insurance premiums.

Here are the main benefits of buying a health insurance plan with a restoration benefit:

• You can get the full amount of the sum insured reinstated once your original sum insured expires.

• Health plans with restoration benefits can keep you covered against multiple medical expenses for different diseases within the same year.

• Buying a health plan with a restoration benefit is more financially efficient than buying a health plan with double the sum insured.

• Even if your original sum insured has been used up, you can live stress-free knowing that the amount has been restored for any future medical emergencies.

Here are some important points about the restoration benefit in health insurance that you should keep in mind:

• If the sum insured has been reinstated once it has been exhausted, it cannot be carried forward to the next year. You will only be able to use the restored sum insured during the same policy year.

• The restoration benefit is only applicable for any future medical emergencies. If your sum insured gets exhausted during a single instance of hospitalisation, the restored sum insured cannot be used for the same expenses.

• The restoration benefit is an ‘add-on’ which must be purchased in addition to the original policy.

Restoration benefit is also available for family health insurance plans, so if your sum insured gets exhausted during one family member’s treatment, the others will be covered as the amount will get restored.