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Features
Ref. No. KLI/22-23/E-BB/492
A restoration benefit is a feature of health insurance that effectively restores your health cover back to the original amount in the same year if you exhaust it.
When you are planning to buy health insurance, you may come across many terms related to the features and benefits of a health insurance plan. It is crucial to understand how all the features of a health insurance policy work to make the most of the policy.
Health insurance is a crucial component of financial planning, providing a safety net for unexpected medical expenses. As individuals seek comprehensive coverage, various features and benefits come into play. One such essential feature is the Restoration Benefit, which adds an extra layer of security to your health insurance plan.
When you buy health insurance, you are offered a sum insured in a given year. This means that if you have medical expenses covered under your policy, you will be paid only up to the coverage amount. So, if you have a policy with ₹5 lakh coverage, you can claim your policy for medical costs amounting to only this amount.
A restoration benefit is a feature of health insurance that effectively restores your health cover back to the original amount in the same year if you exhaust it. If you make multiple claims on your health insurance policy in the same year and use up your coverage amount, a restoration benefit will restore your health cover again.
The functioning of restoration benefits varies among insurance providers, but the basic principle remains the same. When a policyholder makes a claim and the sum insured is fully or partially utilized, the restoration benefit kicks in. It typically reinstates the entire sum insured amount or a predefined percentage, providing the policyholder with renewed coverage for the remaining policy year.
For example, let us say you have a health insurance policy with an insured sum of ₹50,000 and a restoration benefit of 100%. Suppose you make a claim of ₹40,000. In that case, the restoration benefit will replenish your sum insured back to the original ₹50,000, allowing you to make additional claims up to that amount within the same policy year.
In the health insurance market, there are typically two types of restoration benefits:
Fixed Restoration Benefit
This benefit involves the insurer providing a predetermined restoration amount equivalent to the sum insured. Consider a policyholder with coverage of ₹5,00,000. Suppose the policyholder undergoes surgery and exhausts the entire sum insured but later in the same policy year requires hospitalization due to illness. In that case, the insurer will restore the coverage amount to ₹5,00,000. Consequently, the policyholder will have a total coverage amount of ₹10,00,000 for that policy year. It is important to note that the restoration benefit applies only after the total sum insured has been utilized.
Partial Restoration Benefit
This type of restoration offers an advantage over the fixed restoration benefit as it does not require the complete depletion of the sum insured to be utilized. For instance, if a policyholder has a health insurance policy with a sum insured of ₹6,00,000 and a partial restoration benefit of ₹2,00,000 and incurs medical expenses totaling ₹6,00,000 in a policy year, exhausting the entire sum insured amount, the insurer will restore only a portion of the sum insured amount, specifically ₹2,00,000. As a result, the policyholder will have a total sum insured amount of ₹8,00,000 for the same policy year under the partial restoration benefit.
Restoration Benefit is a unique aspect of insurance policies that provides many advantages, offering policyholders a safety net that goes beyond traditional coverage. Let us now discuss the key benefits of Restoration Benefit and understand how it can be a game-changer in the world of insurance.
Restoration benefit ensures that you have continuous health coverage throughout the policy year, even if your initial sum insured is exhausted. This is particularly beneficial in case of unexpected medical emergencies or critical illnesses that may require multiple hospitalizations.
Healthcare costs can be unpredictable and may exceed the initial sum insured. Restoration benefit provides an additional layer of financial security, helping policyholders meet unforeseen medical expenses without worrying about exhausting their coverage.
The restoration benefit adds flexibility to health insurance plans, allowing policyholders to address unexpected health issues without the fear of running out of coverage. This flexibility is especially valuable for those with family coverage, where multiple individuals may require medical attention.
By offering the restoration benefit, insurance companies aim to provide a cost-effective solution for policyholders. Instead of purchasing a higher sum insured, individuals can rely on the restoration benefit to enhance their coverage when needed.
In recent years, insurance providers have introduced innovative features to enhance the scope and utility of health insurance policies. One such feature gaining prominence is restoration benefits.
Extended Coverage without Additional Premiums
One of the significant advantages of restoration benefits is the extension of coverage without the need for additional premiums. In traditional health insurance policies, once the sum insured is exhausted, any subsequent medical expenses are the policyholder’s responsibility. However, with restoration benefits, the coverage amount is replenished, allowing for continued protection without an increase in premium payments.
Financial Security in the Face of Multiple Medical Events
Health issues often arise unexpectedly, and policyholders may find themselves facing multiple medical events within a single policy year. Restoration benefits provide a financial safety net in such situations. Whether it is a major surgery followed by an unforeseen illness, these benefits ensure that the policyholder has the necessary coverage for various medical events without worrying about exhausting the sum insured.
Flexibility in Utilizing Coverage
Restoration benefits offer flexibility in utilizing coveragCoverage gaps can concern traditional health insurance policies, especially for individuals with chronic illnesses or those prone to frequent medical events. Restoration benefits act as a buffer, preventing coverage gaps by reinstating the sum insured ensuring continuous protection throughout the policy year.nding on the type of restoration benefit (fixed or partial), policyholders can either have the entire sum insured replenished or a portion of it after exhaustion. This flexibility allows individuals to tailor their coverage to their specific health needs and financial capabilities.
Prevention of Coverage Gaps
Coverage gaps can concern traditional health insurance policies, especially for individuals with chronic illnesses or those prone to frequent medical events. Restoration benefits act as a buffer, preventing coverage gaps by reinstating the sum insured ensuring continuous protection throughout the policy year.
Cost-Efficient Alternative to Higher Sum Insured
Instead of opting for a higher sum insured, which often comes with a higher premium, restoration benefits provide a cost-efficient alternative. Policyholders can choose a standard sum insured and rely on restoration benefits to enhance their coverage when needed, potentially saving on premium costs.
While restoration benefit is a valuable feature, it is essential to consider various factors when choosing a health insurance plan:
Understand the specific terms and conditions associated with the restoration benefit, such as the percentage of restoration, any waiting periods, and limitations on the number of times it can be availed within a policy year.
Check the list of network hospitals associated with the health insurance plan. Having a vast network ensures that you can avail cashless treatment at various healthcare facilities.
Evaluate the premium costs associated with the health insurance plan. While restoration benefit adds value, it is crucial to ensure that the overall premium is affordable and aligns with your budget.
The restoration add-on may not be universally applicable, but it is a sensible choice for specific categories of individuals. If you fall into any of the following groups:
Opting for a restoration benefit is worth considering. This option is also advantageous for individuals concerned about unforeseen medical expenses during the policy year. Additionally, those holding family floater plans stand to benefit, as the shared sum insured extends coverage to everyone included in such policies.
A restoration benefit is most helpful if you have bought a family floater health insurance plan for your entire family. In case you’re in a situation where a family member requires treatment, the chances are that you will end up exhausting your health coverage amount. If another family member requires treatment in the same year, your policy won’t be able to cover it due to exhaustion of the limit. However, if your family floater policy had a restoration benefit, your health cover would be restored after exhaustion, and you can still use your policy in the same year.
A restoration benefit can come in handy if you make multiple health claims on your policy in a given year. Do note that a restoration benefit can only be used once during the policy tenure and is only provided on complete exhaustion of your insured sum.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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