As health care costs are rising at an unprecedented rate, a single medical crisis is enough to make you realise that your health cover is not sufficient. Moreover, when you cross the mark of 40, you may start experiencing medical conditions that eluded your younger self. That’s when your insurance coverage may look meager, especially if you had bought the policy a few years ago, and haven’t expanded your coverage since.
As most health insurance companies are aware of this fact, they have come up with a reset or refill benefit.
As per this feature, the basic cover gets automatically reinstated if you exhaust the entire sum insured during the policy tenure. For instance, you have a health insurance policy that offers Rs 10 lakhs coverage. During the policy tenure, you fall ill, and there is a claim of Rs 10 lakhs, which the insurer settles. In a few months, another claim of Rs 5 lakhs arises. In a regular mediclaim policy, you would be required to pay the entire amount from your pocket. However, if your policy comes with a restore feature, the insurer will reset your sum insured after the first claim. Which essentially means that your insurer will cover the second claim as well.
Here is an illustrative example:
|Reset Benefit Example|
|Sum Insured||Cases||Scenario 1||Scenario 2|
|Sum Insured||Rs 8,00,000||Rs 8,00,000|
|First Claim Amount||Rs 5,00,000||Rs 3,00,000|
|Remaining Sum Insured||Rs 3,00,000||Rs 5,00,000|
|2nd Claim||Reason||Heart Attack||Cancer|
|Second Claim Amount||Rs 5,00,000||Rs 4,00,000|
|Will the reset feature trigger?||Yes, sum insured will reset to Rs 8 lakhs as the available sum insured is not enough to settle the claim which is for an unrelated ailment||No, since the available sum insured is sufficient to pay the claim|
|Remaining Sum Insured||Rs 6,00,000 (8,0,000+3,00,000-5,00,000)||Rs 1,00,000 (5,00,000-4,00,000)|
Not all reset features are same
There are various types of restoration benefits which are offered by health insurers:
- Complete exhaustion of sum insured: In various health insurance plans available in the market, the insurer restores the sum insured only when it is completely exhausted. In other words, the restoration feature will activate only when the policy coverage comes down to zero.
- Partial exhaustion of sum insured: It works in favour of policyholders as the restoration will get triggered even when there is a partial exhaustion of sum insured.
In almost every case, health insurers reinstate 100% of the sum insured in a policy tenure. It means you are covered for the double of your basic cover amount. For a cover of Rs 10 lakhs, you can get a coverage of Rs 20 lakhs.
Benefits of health insurance policies with restoration feature
As per the new health insurance regulations, a health insurer can’t charge a higher premium from the policyholder after a claim. This rule applies to restoration as well. It means, without fearing the rise in premiums, you can get your sum insured restored. Further, this feature ensures the complete peace of mind in case of hospitalisation twice in a policy tenure and thus, helps you get the best medical treatment without worrying about the soaring medical bills.
Though, the reset feature means paying a slightly higher premium, it could be a right decision to opt for it. In the case of family floater plans, if one insured member exhausts the cover, the insurer refills the entire cover to secure the rest of the family members.
How to make the optimum use of restoration?
Though, the concept of restoration is good; you need to be extra careful. Acting as a ‘magical’ backup to your insurance policy, the reset benefit comes with the following features:
- A policyholder can use the reset amount for all future claims within the same policy term, not related to any injury or illness for which a claim has already been paid
- Reset doesn’t arise in the case of the first claim
- For individual mediclaim policies, the reset sum insured is available only on an individual basis, while for family floater, it is available on a floater basis
- Any unutilised reset sum insured cannot be carried forward to the next policy year
In the long run, as the medical bills are getting fatter and fatter, it is apt to go for a restoration feature.
Tread with caution
Restoration offers a temporary resort to your sum insured, and therefore, it should not be considered as a substitute for a comprehensive health insurance policy. It is necessary to carefully read the policy wordings and understand the fine print around the restoration feature before choosing the policy.
To conclude, always compare the extra premium that you may require to pay for the restoration benefit against taking a higher health insurance cover. The pros of a comprehensive health insurance policy can never outweigh the reset feature in the long run.