Should you purchase a Health Insurance Plan with Restore Benefit?

Health Insurance Plans come in many variants.  Presence of many features in the health plans makes it difficult to compare two plans. In a recent post, I had discussed maternity benefit in health plans in detail.

In this post, I will focus on the Restore benefit. Under some plans, this benefit is also known as refill benefit. I will also discuss if it is prudent to health insurance plan with restore benefit.

What is Refill benefit or Restore Benefit  in Health Insurance Plans?

Under health insurance plans with restore benefit, if your Sum Insured gets exhausted towards treatment of an illness, the insurance company restores your Sum Insured.

For instance, you have purchased a health plan with Sum Insured of Rs 10 lacs. You get diagnosed with a kidney problem and exhausted the entire Sum Insured of Rs 10 lacs towards medical treatment of the kidney problem within the first six months.

You get diagnosed with a heart problem after 2 months. In such a case, the insurance company will restore the Sum Insured. So, you get an additional coverage of Rs 10 lacs during the policy year. So, in this case, even expenses for heart treatment will be covered up to Rs 10 lacs.

God forbid, if such an unfortunate series of events were to happen to you, you would have got medical cover of Rs 20 lacs (for the price of Rs 10 lacs).

Sounds too good to be true?

Where is the catch?

Let’s look at policy wordings of Apollo Munich Optima Restore Health Insurance Plan.

If the Basic Sum Insured and multiplier benefit (if any) is exhausted due to claims made and paid during the Policy Year or made during the Policy Year and accepted as payable, then it is agreed that a Restore Sum Insured (equal to 100% of the Basic Sum Insured) will be automatically available for the particular policy year, provided that:

1. The Restore Sum Insured will be enforceable only after the Basic Sum Insured inclusive of the Multiplier Bonus under Section IV have been completely exhausted in that year; and
2. The Restore Sum Insured can be used for claims made by the Insured Person in respect of the benefits stated in Section I;
3. The Restore Sum Insured can be used for only future claims made by the Insured Person
4. No Multiplier Bonus under Section IV will apply to the Restore Sum Insured;
5. The Restore Sum Insured will only be applied once for the Insured Person during a Policy Year;
6. If the Restore Sum Insured is not utilized in a Policy Year, it shall not be carried forward to any subsequent Policy Year.

In case of Family Floater policy, Restore Sum Insured will be available for all Insured Persons in the Policy.

Exclusion: Illness/disease for which a claim has been paid in the current policy year under Section I.

 Definition of Restore/Refill benefit was similar across other health insurance plans too.

What does it mean?

The Restore Benefit (extra Sum Insured) is applicable only for future (subsequent) claims and that too for unrelated illnesses.

So, if you were undergoing treatment for kidney problem and your medical expense ran into Rs 15 lacs, the restore benefit will not kick in. You will have to pay Rs 5 lacs from your pocket. This is because restore benefit will kick in only for a subsequent claim.

Alternatively, if you cover has been exhausted for kidney treatment and get hospitalized again due to relapse of the problem (and run a bill of Rs 4 lacs), the restore benefit will again not kick in. You will have to pay Rs 4 lacs from own pocket. This is because restore benefit kicks in only in case of hospitalization due to an unrelated illness.

Aforesaid points (subsequent claims and unrelated illnesses) reduce the utility of restore benefit.

I am not a medical practitioner but I feel you are more likely to get hospitalized due to relapse of existing illness than due to an entirely different ailment.

And yes, the insurance company has to be convinced that the two hospitalizations are unrelated. This brings in an element of subjectivity. And subjectivity is never good at the time of insurance claims.

Individual or Family Floater

I see merit in restoration benefit in Family Floater policies. Even if you get hospitalized with a certain illness and exhaust the Sum Insured, the remaining family members will continue to enjoy the cover.

How much excess premium do you pay for Restore Benefit?

It is difficult to put a number to this. Health Insurance Plans are so heterogeneous.

However, there is a way to estimate this cost. And that is through premium for super top-up plans. Super top-up plans cover hospitalization expenses in excess of a particular threshold (deductible) during a policy year.

So, if you purchase a super top-up plan with Sum Insured of Rs 10 lacs and a deductible value of Rs 10 lacs, super top-up plan will cover medical expenses in excess of Rs 10 lacs.

If you compare Super top-up plan with Restore Benefit, super top-up plan is more comprehensive since it does not have restriction of subsequent claim and unrelated illness.

Apollo Munich Optima Super Family Floater (a super top-up plan) costs Rs 3,950 for a young couple (both aged 30).

Since the Restore Benefit in health insurance plans comes with various restrictions, the cost of benefit should be much lower. Of course, I don’t have the exact number.

In case you do not purchase a plan without Restore Benefit, it is not so expensive to create Restore Benefit (or even better in terms of coverage) on your own by purchasing a Super-Top Plan. And Super top-up health insurance plans are not so expensive either.

Must Read: All you need to know about Top-up and Super Top-up Health Insurance Plans

Additional Read: How to claim from multiple Health Insurance Plans

PersonalFinancePlan Take

Between two health insurance policies that offer the same benefits at a similar price, opt for one with restoration benefit. This is a no-brainer.

If nothing else, this will at least cover your hospitalization due to accidents. In case of family floater plans (with restore benefits), other members can continue to enjoy the cover even if one of the members has exhausted the base cover.

But you know the limitations of restore benefits.

During the sales pitch, you might be told that you are getting twice as much cover without paying anything extra. There is no need to get over-excited.  The restore benefit is only for subsequent claims and for unrelated illnesses. Hence, the benefit is quite restrictive.

The restore benefit should not be your top priority feature while finalizing a health insurance plan. Focus more on other parameters such as sub-limits, waiting periods and procedures covered. As discussed before, it is easy to replicate Restore Benefit through a super top-up plan at a reasonable price.

Image Credit: Pictures of Money, 2014. The original image and information about usage rights can be downloaded from Flickr.