How Does Health Insurance Restoration Benefit Work?

The core purpose of buying health insurance is financial protection in medical emergencies. You expect your health insurance coverage to become a safety net if you fall ill so that you can get treatment without worrying about the bills. Even though you can make multiple claims for health insurance per year until you exhaust the sum insured, what happens if you have reached your coverage limit? Will you lose financial protection for the remaining policy period just because you have claimed the full sum insured?

Read this blog to find answers to these pressing questions and explore the importance of restoration benefits. 

Restoration Benefits – What Are They?

Suppose you have used up the sum insured and cumulative bonus within a calendar year due to a disease or hospitalisation. Now, if you had bought a restoration benefit add-on while buying your insurance policy, the original sum insured would have been restored. Let’s understand this with an example. 

Ramesh is a healthy 35-year-old with an insurance coverage of Rs. 5 lakh. He was diagnosed with severe COVID-19 after his foreign trip, which severely affected his lungs. This made him stay in the ICU for 10 days to recover, the hospitalisation expenses of which amounted to Rs. 4.5 lakh. 

He makes an insurance claim, and his policy covers the entire bill, leaving his sum insured at Rs. 50,000 for the remaining year. Now, consider two scenarios when, after a few months, he suddenly requires gallbladder surgery (total cost is Rs. 3 lakh) for his acute abdominal pain:

Types of Restoration Benefits

Based on what triggers restoration benefits, there are two types of plans:

1. Complete exhaustion – Restoration benefit will be triggered only when the total sum insured is used up completely. In the above case, Ramesh cannot claim restoration benefit for his second hospitalisation because he still has Rs. 50,000 sum insured. So, he has to pay Rs. 2.5 lakh for his second surgery and claim the remaining Rs. 50,000. Only after exhausting the full insured sum of Rs. 5 lakh will his restoration benefit be triggered. However, for the remainder of the policy period, the sum insured will be restored to Rs. 5 lakh. 
2. Partial exhaustion – Restoration benefit will be triggered even if only a partial sum insured is exhausted. Ramesh’s restoration benefit will be kicked in for his second surgery, avoiding all out-of-pocket expenses. 

Beware of Hidden Clauses

• Restoration benefits can be triggered only after the first claim. It cannot be used to extend coverage of the first claim during the policy year. 

• While some insurance providers offer built-in restoration benefits for a slightly higher premium, generally, it is available as an add-on. In that case, it will impact your premium. 

• When you make multiple large claims in a year, your perceived health risk increases, and your insurer may revise your premium for the following year. Generally, insurers review your claim history to determine your premiums during policy renewal. 

• Not all types of restoration benefits will trigger automatically. Some policies have specific conditions related to hospitalisation exceeding a certain number of days to trigger add-on benefits. The insurance providers may also exclude certain illnesses based on your health history. 

• Generally, restoration benefits will be triggered only once per policy year. However, certain insurance providers trigger restoration benefits multiple times if you have unlimited restoration add-on cover. You cannot carry forward these benefits for the following year. Restoration often happens only when you have two illnesses within a policy period. Some insurance plans offer restoration of the sum insured for a second hospitalisation for the same illness after a 30-45 day waiting period. 

Why Should You Opt for Restoration Benefits?

Restoration benefits offer extensive financial coverage for multiple medical emergencies within the same policy year, giving you peace of mind.

 It is more important for family health insurance policies because one family member exhausting the sum insured should not destroy coverage for another person covered by the policy. 

While this add-on that may have limited usage increases your premium, it gives you peace of mind, especially if you have pre-existing health conditions or a family history of major illnesses. 

Key Takeaways

Restoration benefit is an add-on benefit for individual and family health insurance that you can buy at a nominal extra cost. If you have not used restoration benefits for a policy year, you cannot carry forward the benefits for the following year. With every policy renewal, you should opt for restoration benefits. Also, you can use the benefit only for the second claim, but most insurance providers restore 100% of the sum insured. 

Before signing policy documents, understand triggers, exclusions, and coverage to derive value from restoration benefits. Compare insurance plans from leading insurance providers in India and explore add-ons to maximise health insurance benefits. Platforms like PhonePe can help you navigate your insurance options smoothly and efficiently.