Restoration Benefit in Health Insurance - Restoring the Sum Insured

There are many aspects to health insurance that are not popular amongst the general public. 

People are usually not aware of different benefits that are packed within their health insurance, or those which can be bought as add-ons. These add-ons can help massively when required. Restoration benefit in health insurance is one such benefit that can be bought as an add-on when not included in the policy.

As per the IRDAI Annual Report 2023–24, Policyholders who made multiple claims in a single year ended up exhausting their base sum insured underlining the growing need for restoration benefits

What is the restoration benefit in health insurance?

With restoration benefits, if the sum insured gets fully or partially utilized, the insurance provider will restore it to the original amount. The amount is restored and the policyholder can use it for future use during hospitalization and claims.

Often considered to be a backup plan, restoration benefit, also known as refill policy, can come in handy if treatment is required multiple times in a year.

Why is the restoration benefit important?

Like everything else in life, it is important to have a backup plan. Similarly, in a health insurance policy, restoration benefits act just like a backup option for your insurance. If by any chance you happen to utilize the entirety of your sum insured, the restore benefit will become useful. With this benefit, you need not worry about exhausting your insurance cover. It is beneficial in family floater plans as well because even if one member of the family exhausts the base amount of your chosen policy, the rest of the members can utilize the restored amount in case of medical emergencies.

• Backup Plan During Medical Emergencies: With rising medical costs, exhausting your base sum insured isn’t uncommon. This benefit ensures you're still protected.
• Great for Family Floater Policies: More family members = higher chance of multiple claims. Restoring benefit ensures continuous protection for all.
• Peace of Mind in Critical Illness Cases: Long-term hospital stays or expensive treatments can deplete your policy. A restore benefit gives you a financial cushion.

For example - Suppose the family floater plan is for 5 Lacs and one of the family members’ get hospitalized. In case he or she utilizes the base amount, i.e, 5 Lacs, it will be refilled again upon exhaustion. This refilled amount can be used to curtail future medical emergencies by other family members.

Restoration benefit types

1. Complete exhaustion

If the total sum insured gets exhausted within a year due to multiple hospitalizations, then this type of restoration benefit comes into play. With complete exhaustion, you can get 100% of the sum insured restored in your policy.

The majority of health insurance plans provide this benefit so that the patient does not need to worry about the total exhaustion of his or her insurance policy. This benefit is offered by a few insurers in an insurance policy, but it can be bought as an add-on.

• The restore benefit is triggered only when the entire sum insured has been used up.
• Common in most base insurance policies with in-built restore options or add-ons.
• The restored amount can be used for a future, unrelated claim in the same policy year.

For example, Ketan’s health insurance policy provides a cover of up to 5 Lacs. Due to some illness, he exhausted his cover within a few months only. If he has restoration benefit, upon exhaustion, the whole amount will be restored for his usage. He can use the full amount again if the necessity arises.

2. Partial exhaustion

With this benefit, even if your sum insured is not completely exhausted or utilized, you can still get the restoration benefit on partially exhausting your policy.

• This benefit gets activated even when your sum insured is partially used.
• Some insurers offer this as an enhanced add-on benefit.

For example - If your original sum insured is 5 Lacs, from which you have exhausted 3 Lacs, you will be left with only 2 Lacs. But with a partial exhaustion policy in play, your amount insured will get fully restored to 5 Lacs, that is, the previously used amount will get refilled. The sum insured will be available for future medical requirements.

How to buy a restoration benefit plan?

You can easily buy restoration benefits on your existing health insurance policy or while renewing one. It can also be bought as an add-on cover with a nominal increase in premium. It is important to know about the different benefits you can avail of while buying health insurance policies. One must go through the fine print beforehand to make optimum use of their insurance policy.

You can get restoration benefits in two ways:

• Built-in Option: Some policies offer this benefit as a standard feature.
• Add-On Cover: Most commonly, you can buy this as an add-on rider by paying a slightly higher premium while purchasing or renewing your health insurance.

Also Read: Convalescence benefit in Group Health Insurance

Unlimited vs. Limited Restoration Benefit

• Unlimited Restoration: Some insurers offer the restoration benefit multiple times during the same policy year (great for large families or repeated claims).
• Limited Restoration: Restoration happens only once per policy year, even if you exhaust the sum again.

Important things to know about restore benefit in health insurance

There are certain things you need to be aware of before claiming the restoration benefit or restore benefit in health insurance policy

1. The restored amount can only be utilized in one policy year. The policyholder can not use the amount in the upcoming year.
2. Once the base amount is utilized, you can still benefit from the restored amount till the end of your policy year.
3. This benefit can be triggered for an unrelated medical emergency. That is, if you have utilized your base amount for heart-related uses, you cannot use the restored amount for heart-related issues for the second time.
4. It can be easily bought as an add-on policy with your existing insurance plan.
5. In the case of family floater plans, if one member has exhausted the base amount, the rest of the family can continue to enjoy the cover till the end of the policy year.

What are recharge benefits in health insurance?

The Recharge Benefit is a feature in health insurance where your sum insured is automatically refilled (recharged) whenever it reduces due to a claim. Unlike restoration which usually activates only after you exhaust your cover, recharge works immediately after any claim, even if there’s some balance left.

Example:

Mr. Arjun has a ₹3 lakh individual health insurance plan with a recharge feature.
In March, he undergoes a gallbladder surgery costing ₹2 lakh. His available balance reduces to ₹1 lakh. Since his policy has a recharge benefit, the insurer immediately restores his cover back to ₹3 lakh after the claim is settled. In July, he was hospitalized again for a knee injury, with expenses of ₹1.5 lakh.

Without recharge → Arjun would only have had ₹1 lakh left and paid ₹50,000 from his pocket.

With recharge → His insurer recharged the policy, so the full ₹1.5 lakh was covered

Summary: Is the restoration benefit worth it?

Absolutely! Restoration benefit gives you double protection for a nominal premium. Whether you're an individual policyholder or offering group insurance to employees, this feature ensures no one is left unprotected when medical emergencies strike more than once in a year.

Backup your sum insured because health doesn’t come with limits.

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