What Is Restoration Benefit In Health Insurance, And How Does It Work?

• Introduction
• Restoration Benefit In Health Insurance - Meaning
• Some Important Points You Should Know About The Restoration Benefit In Health Insurance
• Favorable Conditions In Restoration You Should Look For
• Adverse Conditions In Restoration You Should Be Aware Of
• Comparison Of Restore Plans In The Market
• A Question You Might Have
• What’s the Beshak Recommendation?

If you’re a regular at Starbucks, you’ll be aware of the free refills you get if you’re part of their loyalty program. Although the refills are only valid for some specific low-cost drinks - they’re ‘free and unlimited’ and that makes us happy! :-)

What if - similar to these coffee refills, you could get refills of your health insurance sum insured as well? Yes, you read that right. There’s a feature that a lot of health insurance policies today offer, called the - ‘Restoration Benefit’ that refills or restores your sum insured when it gets exhausted. In some policies, this feature is available by default, while in others, it is available as an optional benefit.

Considering today’s rising medical costs, it is possible that your entire sum insured gets completely exhausted within a single major hospitalization and you’ll be left without a cover for the rest of the year. And, if your policy is a family floater - this will mean that your family will be left without the protection of a health insurance plan, for any hospitalization needs they might have.

This is when the Restoration benefit feature of a health insurance policy comes in.

In this article, let’s quickly learn about what is restoration benefit in health insurance, how it works, when it can come in handy, what the catch is and some special offerings insurers provide along with this Restoration benefit. 

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Restoration benefit - also called Restore, Reinstatement, Refill or Reset by different insurance companies, is a feature that restores your sum insured after it has been exhausted, within a policy year. 

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• When does the restoration kick in? Restoration triggers when you use up your base sum insured along with bonus (if any), in a policy year. In some policies, it triggers only when the entire sum insured is exhausted, while in some others, even partial exhaustion of the sum insured can initiate Restoration. We’ll learn about this in detail later! 
• For which treatments can you use the restored coverage? In some policies, the restoration benefit feature is restricted for ‘unrelated conditions’ only. Meaning - you can claim if the second hospitalization is for a condition that’s not directly related to your first hospitalization. Family floaters might also have a condition that the restored amount can only be used by a different member or for a different disease.
• How much restoration? Restoration benefit refills the sum insured up to the base policy cover by a certain% - usually 100%. 
• How many times can the cover be restored? The Restoration benefit usually triggers only once a year, except in some plans which offer an unlimited restoration. In either case, the maximum amount you can claim in any hospitalization cannot be more than your base sum insured (and bonus, if any). Also, the restored sum insured expires every year - meaning, once it is triggered, the restored sum insured cannot be carried forward to the next policy year.
• Additional conditions: In some policies, restoration may not be applicable on the first claim you make in a policy year - meaning, you cannot use the restored sum insured for your first hospitalization.

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1️⃣ Pay for Related Illness 

In some policies, the Restoration benefit is restricted for ‘unrelated conditions’ only. Meaning - you can claim if the second hospitalization is for a condition that’s not directly related to your first hospitalization. 

This might become a problem in case you suffer from a chronic illness that requires multiple hospitalizations within the same year, and you exhaust your sum insured. As far as possible, you should opt for the restoration feature that covers related and unrelated illnesses so that the restored sum insured can be used for all conditions, treatments, and injuries - and you don’t want to worry about it!

Let's understand this better with the help of two examples.

Example 1: Restoration is restricted to ‘unrelated claims’.

Arun has a health insurance policy of INR 10 lakhs. The restoration benefit feature in his policy is restricted for unrelated diseases. He undergoes surgery for cancer and exhausts his entire sum insured of INR 10 Lakhs. Now, as soon as he makes the claim, the restoration will trigger and refill the sum insured. 

But, because of the restriction on related claims, he cannot use this restored sum insured if he undergoes hospitalization again for treating cancer in the same policy year. However, if he is hospitalized for some other condition - say a heart surgery, he can use the restored sum insured.

Example 2: Restoration pays for related claims. 

Ananya has a health insurance policy of INR 10 lakhs and the restoration benefit feature in her policy covers related claims. She undergoes heart surgery and her entire sum insured is used up. Now, the restoration benefit will restore her policy sum insured - and this restored sum insured can be used even if she undergoes hospitalization for heart treatment again, in the same policy year.

Some plans that pay for related illnesses:

• Star Health (Comprehensive)
• Max Bupa (Health ReAssure)
• HDFC Ergo (Optima Restore)

2️⃣ Trigger on partial exhaustion 

In most policies, the restoration/reinstatement triggers only if your base sum insured (and no claim bonus, if any) is completely exhausted. In some policies, however, the restoration triggers on partial exhaustion of the base sum insured and bonus (if any) as well. You should opt for the restoration benefit feature only if the restoration is triggered on partial exhaustion of the sum insured and bonus.

Let’s take an example for both - Restoration on partial exhaustion, and full exhaustion. Say you and your colleague buy health insurance policies of a sum insured of INR 5 lakhs each - from different insurance companies. Now, you have a Restoration benefit feature that triggers restoration on partial exhaustion of the cover. On the other hand, your friend’s policy only triggers restoration on the full usage of the base plan. Say you both get hospitalized within the year. Just for simplicity’s sake, we’ll assume that both the bills are of INR 2 lakhs. 

Your case, with a restoration on partial exhaustion: As soon as you use the 2 lakhs, restoration is triggered and the sum insured is refilled to 5 lakhs. So, in case you need - for the next hospitalization you have a sum insured of INR 5 lakhs available. 

Your friend’s case, with a restoration on full exhaustion: Restoration will not trigger in your friend’s policy as the entire sum insured of INR 5 lakhs is not yet exhausted. For the next hospitalization, your friend will have a sum insured of INR 3 lakhs available. 

Some plans where restoration triggers on both partial & complete exhaustion of sum insured:

• Niva Bupa (Health Companion)
• Niva Bupa (Health ReAssure)
• Aditya Birla Health (Activ Health Platinum - Enhanced & Premiere)
• HDFC Ergo (Optima Restore)
• Manipal Cigna (ProHealth)
• ICICI Lombard (Complete Health Insurance)

3️⃣ Unlimited restorations

While some health insurance plans allow restoration of the sum insured only once during the policy year, there are plans that allow unlimited restorations too. So, as far as possible, choose a plan that allows unlimited reinstatements or refills of the sum insured. This will be helpful if you need to undergo multiple hospitalizations within a single policy year.

Some plans that allow unlimited restoration of the sum insured during a policy year:

• Max Bupa (Health ReAssure)
• ICICI Lombard (Complete Health Insurance - Health Shield & Health Elite)
• Aditya Birla Health (Activ Health Platinum - Premiere)
• Manipal Cigna (ProHealth)

Some plans that allow unlimited restoration of the sum insured during a policy year, as an optional cover:

• Care Insurance (Care)
• Aditya Birla Health (Activ Assure Diamond)

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Here are some negative exceptions that might limit you from getting the full benefits of the Restoration benefit. You should look out for these and if possible, try to buy a policy without them.

1️⃣ Activated once for critical illnesses

In some policies, the restoration is activated only once in a lifetime for critical illnesses like cancer and kidney failure requiring regular dialysis. 

For instance, say you get diagnosed with Cancer - a critical illness listed in your policy document. You’ll have to undergo multiple hospitalizations for chemotherapy. However, the restoration in your policy has a condition that it will trigger only once for a critical illness. 

Say you undergo hospitalization for chemotherapy and use up the entire cover, the Restoration benefit will refill your cover. Now, if you undergo another hospitalization for chemotherapy again and exhaust your cover, the restoration will not trigger because of the condition.

Plan where restoration is activated only once for critical illnesses: 

• Bajaj Allianz (Health Guard)

2️⃣ Restored sum insured can’t be used for certain illnesses

In some policies, there is a condition that the restored amount cannot be used for certain listed illnesses in the policy document.

So, if there is such a condition in your policy, it means that you cannot use the restored sum insured if you undergo hospitalization for treatments of specific illnesses listed in your policy document like Cancer, Kidney failure, Coma, Heart attack, etc.

Some plans where the restored sum insured cannot be used for certain illnesses:

• IFFCO Tokio (Family Health Protector)
• IFFCO Tokio (Individual Health Protector)

3️⃣ Restore up to claim amount and proportionate premiums charged for the restoration of sum insured

There are some health insurance plans in the market that allow restoration only up to the claim amount - and not up to the sum insured and charge a separate premium for the same. As soon as your base cover is refilled, the premium for this restoration will be recovered from the claim amount. This premium will be calculated on a pro-rata basis on the proportion of claimed amount to the basic sum insured and the annual premium.

Some plans that charge proportionate premiums for the restoration of sum insured:

• IFFCO Tokio (Family Health Protector)
• IFFCO Tokio (Individual Health Protector)

4️⃣ Not all benefits covered 

Some policies come with a condition that the restored sum insured can only be used for inpatient treatment costs. You can't use the restored sum insured for other benefits such as pre & post-hospitalization expenses. So, ensure you check your policy wordings and brochure to know which benefits will the restoration trigger for - before you finalize a policy.

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Here’s a quick comparison of health insurance plans in the market based on whether the plans pay for related or unrelated diseases, on partial or full exhaustion of sum insured, and the number of times the restoration triggers in a policy year. 

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Can I buy a lesser health insurance cover and depend on the restoration benefit feature to take care of a large claim. For instance, instead of buying a 15 Lakh cover - should I consider 5 Lakh cover adequate in policies that have an unlimited restoration benefit? The cost will be less too!

This is important. 

When you take all this together, you’ll realize that even if you have the best-case Restoration benefit with your health insurance plan - that is unlimited restoration + trigger on partial exhaustion with your health insurance plan - the maximum amount you can claim in any one hospitalization is always limited to the base sum insured you choose (+ any bonus you accumulate), and never more. Therefore, it’s not really the same as buying an adequate health insurance cover that will work for you in the long run. 

We strongly recommend that you buy adequate health insurance as a base cover. Do not rely on Restore to come in handy for your long-term hospitalization needs. If by misfortune, a large single claim occurs, you’ll end up having to pay the rest of the amount from your pockets. 

The restoration benefit feature might even encourage you to settle for a lower cover (assuming restoration will kick in and help out). So, be aware of the pitfalls before getting swayed by the seemingly ‘unlimited’ refills!

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Restore should be considered as a good backup for a rare but severe situation. The advantages of the restoration benefit come with several terms and conditions that vary from plan to plan. Only by carefully assessing and understanding these terms, can you ensure that you have a good cover for the long term. 

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