What is Restoration Benefit in Health Insurance?

• Written by Yashita Sinha

  Reviewed by Akhil Pillai

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Due to soaring medical expenses and constantly rising medical inflation, health insurance plans have become more essential than ever. Sometimes even one hospitalisation can exhaust your entire health insurance plan. Consequently, you may be left with no coverage for the rest of the policy year.

This is when the restoration/recharge benefit becomes a saviour. It helps restore your original sum insured amount for the remainder of the policy year.

Whether a family floater plan or individual health insurance, restoration benefit is generally available as an optional or in-built cover, depending on the insurer to insurer. Continue reading this blog for more on restoration benefits.

What is the Restoration Benefit in Health Insurance?

Also known as reinstatement or recharge benefit, restoration benefit is a refill feature of the basic sum insured in health insurance. It’s an additional pool of funds designed to help you manage upcoming medical expenses within a policy year.

In today’s world a single diagnostic test can cost between ₹500 to ₹15,000, this benefit proves to be fruitful in cases where your entire sum insured gets exhausted after a claim.

For example, if your health insurance policy has a sum insured of 5 lakhs and during your hospitalisation, the entire sum insured gets exhausted. The restoration benefit will restore your original sum insured back to ₹5 lakhs within the same policy year.

Types of Restoration Benefits in Health Insurance

There are several types of restoration benefits for the sum insured.

• Fixed Restoration Benefit: Under this benefit, your insurer doubles your Sum Insured after you’ve exhausted your initial SI. The insurance company restores the total coverage within the policy year so that you can meet your hospitalisation needs.
• Partial Restoration Benefit: You can get a top-up without entirely using your Sum Insured, and you can use the additional SI. For example, Mr Singh has an insurance policy of Rs 10 lakh with a Rs 1 lakh restoration. He can use Rs 11 lakh in that policy year.
• Unlimited Restoration of Cover: This benefit allows you to receive the refill of your original sum insured unlimited times within the same policy year.

Automatic vs. Manual Restoration: What’s the Difference?

The below table shows the difference between automatic and manual restoration of sum insured on the basis of certain features:

Key Benefits of Restoration in Health Insurance

Having a health insurance plan with restoration benefits comes with advantages such as:

• Extra Coverage: After the basic sum insured is exhausted, an insured can obtain an extra sum insured with restoration benefits. This is helpful in case of an accident or an existing illness.
• Shared Among Family Members: All family members can use the restoration benefit add-on amount in the family floater plan.
• Continuous Protection: With this benefit, health coverage remains uninterrupted. You continue to get protection from your health insurance company even after your SI is exhausted.
• No Emotional Stress of a Financial Crisis: You can drop off your financial worries as the renewed coverage provides a safety net during a medical emergency.

How Does Restoration Benefit Work?

To understand the restoration of the benefit clause, you need to understand how the restoration of benefits in health insurance works.

When the original sum insured gets exhausted in a policy year, the restoration benefit becomes active, and it restores the exhausted sum insured. Depending on the chosen plan, the restoration benefit may either become active after partial or complete exhaustion of the basic sum insured. The newly refilled sum insured can be used only in the same policy year and is not eligible for carrying forward to the next year.

Things You Must Know About Restoration Benefit

Here are a few highlights of a restoration benefit that you must know:

Who Should Invest in the Restoration Benefit?

Anyone willing to invest can invest in the restoration benefit. Ideally, restoration in medical insurance can be most beneficial for people with a family floater plan or someone with a low-sum insured health plan. The chances of exhausting the original sum insured are higher in both cases.

Carrying Forward the Restoration Benefit

Unlike a no-claim bonus, the benefit restoration plan cannot be carried over to the next policy year—the unused restoration benefit lapses with the end of the policy tenure.

Unlimited Restoration of Health Insurance

Yes, you read it right. With Care Health Insurance, you can enjoy unlimited restoration benefits in health insurance plans. This means that in a policy year, your sum insured will be restored each time, irrespective of it getting exhausted. Hence, you have strong financial support throughout the policy year. Some of our plans that offer unlimited restoration benefits are Care Supreme, Care Classic and Care Youth.

No Sum Insured Cap

You don't need a high-sum insured health plan for the restoration benefit. There is no cap on the minimum or maximum sum insured in a health plan to be eligible for the reinstatement benefit. So, anyone willing to purchase the additional cover of the restoration benefits can do so.

Restoration Benefit: What to Opt?

Keep in mind the following things while buying restoration benefits:

Waiting Period

Restoration benefits in health insurance can be used after the basic sum insured is exhausted. You may be able to use the restored amount for the same illness again in a policy year after a 45-day gap.

For example, if your first claim was for heart disease, you could use the restoration amount for a similar heart disease again after a 45-day gap. However, with the Care Senior plan, restoration benefits can be claimed for the same person's illness without waiting for 45 days.

Claim Process

It should have a smooth claim settlement ratio and the claim process. Make sure you enquire about the claim process in detail.

Exclusions

Read the policy documents, as the restoration benefit does not cover some specific treatments and pre-existing illnesses.

Restorations Permissible

Most policies restore the SI only once annually. You need to check the permissions.

No Carry Forward

To get the most out of the restoration benefit, use it only within the same policy year. It will not be carried forward.

Does Restoration Benefit Increase The Policy Premium?

Yes, the restoration benefit is an add-on benefit, which means you have to pay an extra amount to receive it. Shweta has bought an individual health insurance plan from Care for a yearly premium of Rs 10,000/.

If she wants to purchase restoration benefits, then her premium might increase to some extent. The restoration benefit add-on depends on factors such as the type of policy bought, SI age, and health history.

>>Also Read: Benefits and Coverage under Health Insurance

Restore Your Financial Freedom

Restoration benefits can be a game changer in cases where the sum insured is exhausted and further medical treatments are lined up. Instead of draining your savings, investing in a reinstatement benefit that fills back your sum insured for additional use is better.

People with health plans with a relatively low sum insured or who have a family floater plan where the chances of losing the sum insured are higher may consider investing in a restoration benefit.

Not just for them, restoration benefits in medical insurance can be a crucial investment for anyone, since you can never predict future health needs and emergencies. As mentioned above, some of our health plans offer unlimited restoration benefits that help you focus on your treatment and let the insurance company manage the expenses.

Disclaimers: The above information is for reference purposes only. For more details about the health insurance plans and their benefits, please refer to the sales prospectus, policy terms, and conditions.