How restoration benefit works in an insurance plan

Exhausted sum assured after you made a claim? The restoration benefit in your health policy can help you get back the sum assured

Kavya Balaji   /   December 24, 2020
health insurance policy

When you make claims on your health insurance policy, the sum assured gets reduced. If you exhaust the sum assured for the year, you will have no health cover. However, you can get back the sum assured even if you have made claims in a year. How? This is using the restoration benefit provided by the insurance company.

Restoration is a benefit that restores the entire sum assured in the policy year if it gets exhausted. For instance, if you have a family floater policy and at the start of the year, you use the entire sum assured, your restoration benefit will automatically restore the full amount of sum assured. In other words, the restoration benefit works as a back-up as the entire sum assured is replenished for the policy year. Most of the health plans these days offer the restoration benefit. 

Even though most plans will restore 100 percent of your health plan’s sum assured, there are plans that restore less than that. So, you need to understand the extent to which the sum assured will be restored.

How is the benefit useful?

Let’s say you have purchased a family health plan with a sum assured of Rs. 4 lakhs. Your daughter is injured and you claim Rs. 3 lakhs. Then, your husband falls sick and you spend Rs. 1 lakh. Now, you have no health cover for the year. However, if you have the restoration benefit, your sum assured will be automatically restored once you make claims of Rs. 4 lakhs. You don’t need to worry about medical bills.

Are there any terms for availing the restoration benefit?

Yes. There are many terms and conditions that come with your restoration benefit. Here are the ones you need to note.

Restoration benefit is available only if claims are for different illnesses

The restoration benefit will be available for future claims only if it is for claims that are not related to any illness or injury that you had earlier made claims for. So, you cannot make claims for pre-existing illnesses or injuries for which claims were made in the policy year.

No Restoration benefit for the first claim

You cannot use the restoration benefit for the first claim during a policy year. For instance, Mr. A had an insurance policy for Rs. 3 lakhs and made a Rs. 3.5 lakhs claim. This being the first claim for the year, he will not be able to get the Restoration benefit even after exhausting the sum assured. He will need to pay Rs. 50,000 from his pocket. However, he will get the Restoration benefit for the subsequent claims made during the policy year.

Most plans come with this condition. However, there are plans that allow restoration benefit for an accidental hospitalization.

Restoration benefit cannot be carried forward

You cannot carry forward the restored sum assured to the next policy year. You need to use the restored sum assured within the policy year in which it is restored. 

Restoration benefit can be on complete or partial exhaustion of sum assured

Most health plans provide the Restoration benefit only on the complete exhaustion of the sum insured.  However, there are few health plans that give Restoration benefit on partial exhaustion of the sum insured. This restoration will restore the entire sum insured on partial exhaustion of it during the policy year. 

Is the benefit free?

The Restoration benefit is an add-on to your health plan and therefore comes at an extra premium. You will need to understand whether the extra premium is worth paying.

Who should go for plans with Restoration benefit? 

It works well for all family floater policies and individual health insurance policies as it restores the sum insured. However, under family floater plans where the sum insured is shared by all the family members, it is more useful. This is because there is a higher probability of the entire sum assured getting exhausted during a year. This could leave other family members vulnerable without a health cover. So, a Restoration benefit will help all family members get protection. 

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