Health insurance cover: Restore option or higher sum assured?

Buying the right health insurance cover can be confusing. One needs to be truly informed before selecting a productwith the right combination of available features available.

One of the main elements of an insurance policy is the sum assured. According to insurance companies, health insurance claims above Rs 300,000 are only 1-2 per cent, and almost 80 per cent of claims range between Rs 60,000 and Rs 80,000.

With such small claim sizes, should you opt for the 'restore' feature while buying a policy or opt for higher sum insured.

A normal health insurance policy covers hospitalisation expenses up to the sum insured. It is possible that the entire sum insured is exhausted in a single hospitalisation.

The 'restore' option can be utilised during such situation. “In a health insurance plan with restore or refill benefit, the basic sum insured automatically gets reinstated up to 100 per cent, if it is used up in any given policy year,” says Anand Roy, Executive Director and Chief Marketing Officer, Star Health and Allied Insurance.

During the beginning of the policy year if the policyholder has exhausted the entire sum insured, but if they have opted for 'restore' option the insurer will reinstate the full amount on exhaustion of the sum insured for further claims in that policy year. 

For instance, if you have Rs 1,000,000 cover and during the year due to accidental injuries, you make a claim of Rs 800,000 which gets settled.

Later in the same year, if you incur Rs 500,000 due to hospitalisation, and make a claim, in a regular policy, only Rs 200,000 will be paid to you. Under a policy with the restore benefit, you will get the full Rs 500,000.

In case of a family floater, there are higher chances of the restore feature getting used.

"For a floater policy, if basis sum insured is exhausted by one insured, others can benefit from the restored value as each ailment is treated as a new claim for different members," says Sandeep Patel, Managing Director and Chief Executive Officer, Cigna TTK Health Insurance. However, the restored sum insured can only be used for a fresh claim. He adds, "The restore option cannot be used for any illnesses or diseases for which claims have been made before."

For example, if your previous claim was for diabetes, any hospitalisation related to diabetes will not be claimable under the restore feature, which is one of its biggest shortcomings.

There are higher chances of an individual falling ill with an existing disease than developing a new ailment, where the purpose of restore is lost.

Though the coverage varies from insurer to insurer, a few policies even cover for the same illness. Star Health's family floater plan comes with both restore and recharge feature.

The 'recharge' feature in this policy can be used even for illnesses for which the expense has been claimed, while the 'restore' can only be used for illnesses unrelated to the previous claim.

Also in case, the restored sum insured is not used in a policy year, it cannot be carried forward to the next policy year. Restore feature doesn't work like the no-claim bonus that can be carried forward if not used in the policy year. "Any restored sum insured will not be used to calculate the cumulative bonus or cumulative bonus booster," adds Patel.

To opt for restore benefit, most insurers offer it only with higher sum insured insurance policies. It is available mostly with policies where sum insured is Rs 300,000 and above.

"According to a policyholders requirements, if the limitations of restore benefit are a matter of concern, he should opt for enhancement of sum insured," adds Roy.

Higher sum insured provides a wide coverage and comes with no such limitations as compared to the restore feature. "In case of a high sum insured plan, the risk exposure is comparatively higher due to wider scope of usage, and accordingly the premium also goes up," says Naval Goel, Chief Executive Officer and Founder of PolicyX.com.

Opting for a higher sum assured can cost you around Rs 5,000 extra as compared to 'restore' option. Though the premium is comparatively low for the restore feature, it comes with its own set of restrictions.
It is important to understand the fine prints and choose a policy that provides wider coverage.



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