Team AckoOct 20, 2021
Many beneficial aspects of health insurance are overlooked due to the legal terminology of a policy document. Policyholders need to make additional efforts like asking the insurance agent or using online search engines to understand some basic concepts. Hence, one may ignore useful benefits, such as restoration and recharge benefits in health insurance. This may significantly increase out-of-pocket expenses during claims.
Let us demystify the concepts of restore and recharge benefits in health insurance in this article.
The policyholder raises a claim to cover the cost of hospitalisation or other events as per the policy’s coverage. These coverages are claimable until you have enough sum insured. Usually, making a claim after using up all the sum insured is not allowed unless you have certain benefits. This is where restore or recharge benefits come into play.
Restoration benefit allows you to raise a claim after you exhaust the sum insured as this benefit "restores" it. Meaning, restoration of the sum insured is possible once you use up the entire amount. You can thus make a claim to cover future medical expenses.
Once you decide to opt for the restoration benefit, you can choose from the following types based on your requirement or comfort.
Under partial exhaustion restoration benefit, your health insurance company will restore the basic sum insured to 100% when you partially exhaust the sum insured amount. For example, consider Ms. K got admitted to a hospital after a minor accident and used some part of the sum insured. Her health insurance company will restore the sum insured to 100% after the claim, as she chose the partial exhaustion restoration benefit.
As the name suggests, the insurer will restore the sum insured to 100% when you fully exhaust the sum insured of your health insurance policy. For example, Mr. G had to undergo a planned surgery to remove one of his kidneys. His sum insured was completely exhausted, but the insurance company restored it to 100% after the claim and Mr. G could make a claim when he availed treatment for malaria six months after the surgery.
Opting for the restoration benefit is not mandatory. However, this benefit is ideal for a set of people who have certain types of health insurance policies. The restoration benefit will be useful for the following people.
Policyholders with a Family-floater Health Insurance plan can consider opting for the restoration benefit as the sum insured will be shared by multiple family members.
Policyholders with a low sum insured can opt for this benefit as a backup in case of complete exhaustion to reduce out-of-pocket expenses. Considering the surge in medical costs and the current pandemic, this benefit can come to your rescue in times of need.
The recharge benefit in health insurance is useful when the sum insured decreases due to a previous claim. You can make use of the recharge benefit immediately upon the next claim.
For example, consider Ms. T met with an accident and had to be hospitalised for five days. The sum insured of Rs. 1 lakh decreased by Rs. 75,000. Her insurance company reinstated the sum insured to 100%. This was useful during the next claim for dengue, where the hospital bill amounted to Rs. 60,000.
Note that in the absence of the recharge benefit, Ms. T would have to pay an out-of-pocket expense of Rs. 35,000 (Rs. 1,00,000 - Rs. 75,000 - Rs. 60,000) for the second claim.
Note: Deductibles are not taken into account for the above example.
Restoration & recharge benefits in health insurance are two sides of the same coin. They both reduce your additional expenses for multiple claims. These benefits allow your health insurance company to bear the cost of treatment over and above the basic sum insured of your policy.
Take a look at the following table to understand the key differences between restoration and recharge benefits.
|Parameters||Restoration benefit||Recharge benefit|
|Definition||Restores the sum insured after the sum insured is exhausted.||Restores the sum insured when it gets reduced due to a claim.|
|Type||Complete exhaustion and Partial exhaustion||No subtypes|
The meaning of ‘restoration of cover’ refers to the benefit that your health insurance company will restore the used sum insured when it gets exhausted.
Recharge and restore benefits are similar concepts in health insurance, however, they provide different benefits. You can restore the sum insured when it gets exhausted and ask for a recharge when it is reduced due to a claim.
Yes, the recharge benefit is useful when the basic sum insured decreases, and you need more for the next claim.
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