Restore Option in Health Insurance Policy - Worth the Hype?

There are certain insurers in the market that offer sum insured restoration option in a policy. This is mainly to ensure that the insured has adequate coverage even after the exhaustion of the coverage amount. This is limited to once per policy year.

Individuals often prioritize a lot of things such as career, finance and other factors over their health. Unfortunately this attitude will not help individuals in the long run. Without health, every other aspect of life will be pointless. Although a number of developments have been implemented in the healthcare field, health issues have not gone down significantly nor have the expenses associated with the same. It is therefore, imperative for individuals to procure an insurance plan that safeguards their healthcare expenses.

There are a number of companies and financial institutions over the world that provide healthcare insurance plans to suit individuals’ myriad needs. Applicants will have to verify the numerous benefits and features associated with each of the plans prior to procuring one. Sometimes, a plan will have additional features which may not be of use to an individual, hence will not make sense for him/her to avail that plan. Instead a basic plan would also do. However, there are instances when these added features are helpful. This article will talk about the ‘Restore Option’ in Health Insurance plans.

What does ‘Restore’ Option refer to?

This is an add-on option that comes with certain . It is also known as ‘Refill’ option in certain cases. What this means is that, in case the customer’s Sum Insured is exhausted towards treatment of a particular illness, then the health insurer that has provided the insurance policy, will restore this Sum insured.

For example, if an individual has procured a health policy that has a Sum Insured of Rs.20 lakhs. He gets diagnosed with a heart ailment and spends the entire Rs.20 lakhs on that ailment within the first 6 months. In case he gets diagnosed with a kidney issue after around 2 months, the company that has provided the insurance policy will restore the entire Rs.20 lakhs. Therefore, the individual will receive an additional Rs.20 lakhs during the policy year.

Therefore, customers will receive a cover of Rs.40 lakhs by paying half the amount, if they procure this add-on benefit. But as is the case with most such add-on benefits, there is a catch that customers will have to take into consideration.

Types of ‘Restore’:

There are two types of restoration options available and customers must read the fine print of their health insurance policy before opting for either one. These options are –

  • Complete exhaustion of the insured sum - This type of benefit is offered as part of most health insurance policy. This benefit will come into play only when the entire insured sum along with the bonus is exhausted. In the example mentioned above, if the first claim was Rs.10 lakh and there is still a certain sum available, this benefit will not get triggered for the subsequent claim.
  • Partial exhaustion of the insured sum - This benefit is more advantageous to customers and will come into force even with a partial exhaustion of the insured sum.

Also, with most health insurance plans, this restore option will only kick in for subsequent claims and usually for unrelated illnesses. For example, if an individual is undergoing treatment for a heart ailment and their expense is Rs. 25 lakhs, this benefit will not kick in and the additional Rs.5 lakhs will have to be borne by the individual. However, if the cover has been exhausted for this heart ailment and they get hospitalised for a relapse of the same issue, then this restoration benefit will again, not kick in. This is due to the fact that restoration benefit will only come into force for an unrelated ailment.

This benefit will be ideal for family floater policies rather than individual policies as even if the policyholder exhausts the insured sum for a particular ailment, the rest of the family can avail the restore benefit option.

Restore’ option in health Insurance policies come with their own set of pros and cons. It is up to the individual to read the fine print of their insurance document and avail this benefit based on their requirement.

GST rate of 18% applicable for all financial services effective July 1, 2017.

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