Team AckoJul 22, 2021
There’s little doubt when it comes to the productivity associated with spending a dedicated amount regularly to purchase health insurance. However, there might be doubts surrounding types of health insurance, health insurance premium differences between policies, health insurance benefits, and other such things.
Health insurance companies try to bulk up their offerings with several features to stay one step ahead of the competition. As prospective/existing policyholders, one mustn’t get swayed away by the health insurance benefits but look at the conditions associated with them closely. Comparing health insurance benefits is essential to making an informed choice regarding purchasing the most suitable plan from different types of health insurance policies at an affordable health insurance premium.
One such term that needs understanding in order to make an informed decision is ‘restoration benefits’ in a health insurance policy.
Health insurance policies come with a certain sum insured. If you raise a claim and it is settled, the sum insured gets utilized. Restoration benefit replenishes the exhausted sum insured. Here’s an example for better understanding.
Consider Mr. A has purchased a health insurance policy with a sum insured of Rs. 4 lakhs. Mr. A faced an illness for which he had to be hospitalized. The medical expenses for the treatment amounted Rs. 3 lakhs. After three months, Mr. A got involved in an accident, and had to be hospitalized again. This time, the medical expenses incurred were Rs. 2 lakhs. Since, the balance sum insured was only Rs. 1 lakh, Mr. A had to pay remaining Rs. 1 lakh from his pocket. If Mr. A’s health insurance policy had the restoration benefit feature, he would’ve received the entire Rs. 2 lakh claim settled as the Rs. 4 lakh sum insured would’ve been replenished upon first claim settlement.
A long list of features usually means higher premium. Some insurers provide restoration benefit as a built-in feature while some offer it as an Add-on. Therefore, whether or not inclusion of restoration benefits increases insurance premium, will depend upon the terms and conditions mentioned in the policy document.
If you have an individual health policy, the restoration benefit will only be valid in case of an unrelated health condition. In the example cited above, if Mr. A was admitted to the hospital for the same illness he was admitted earlier, the restoration benefit won’t be applicable.
If there’s a choice between going for an individual health insurance policy with a higher sum insured and going for an individual health insurance policy with a lower sum insured but a restoration benefit, it might be better to opt for higher sum insured. This is mainly due to the ‘unrelated conditions’ clause. Incurring major expenses for one major illness/incident twice seems more likely than incurring major expenses for two major illnesses/incidents.
Restoration benefit works well in case of a family floater plan. For example, consider a family has a floater plan of Rs. 3 lakhs with restoration benefit. One member gets hospitalized and the Rs. 3 lakh cover is utilized. The cover gets replenished thanks to the restoration benefit. In a month, another member faces a car accident and expenses amount to Rs. 3 lakhs. The claim shall be settled thanks to the restoration benefit.
Note: Do read the terms and conditions of the policy in detail, especially when it comes to the restoration benefit clause as different insurance companies might have different conditions even with respect to the information provided above.
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