Understanding ‘restoration benefit clause in health insurance

There are insurance policies that come with restoration benefit clause, whereby the insurance cover exhausted due to claims made by the insured is restored fully by the insurance company. Of course, there are certain terms and conditions that specify when the restoration benefit will trigger and when it will not. Let us look at these terms and conditions.

The restoration clause may stipulate that the restoration benefit will trigger only after complete exhaustion of the sum assured, so only when an insured person exhausts the entire cover due to multiple claims made during the year, the insurance company will restore the cover up to the sum assured in the same policy year. For example, if a person having a health insurance policy with sum insured of Rs 5 lakh fully exhausts the policy amount of Rs 5 lakh on account of multiple claims made during the policy year, then the insurance company will restore the sum assured amount fully for the remaining duration of the policy year. However, if the insurance cover is partially exhausted, say up to Rs 3 lakh, the restoration clause will trigger only after the balance cover of Rs 2 lakh is fully exhausted during the policy year.

Some insurance policies may have restoration clause stipulating that the restoration benefit will trigger even if the insurance cover is partially exhausted. In the above example, if the insured exhausts an amount of Rs 3 lakh, the insured will have only Rs 2 lakh left from the policy cover. However, if there is restoration clause that gets triggered even after partial exhaustion of the sum assured, the insurance company will restore the policy cover to the original Rs 5 lakh for the rest of the policy period.

Then, in some insurance policies, the clause may stipulate that the restoration clause will trigger only for an unrelated medical condition or illness. So, if an insured person exhausts the entire sum assured for, say a bypass surgery, and if he is again hospitalised for related heart ailment during the same policy year, the restoration clause will not trigger. However, if he is hospitalised for a different ailment, say a kidney disease, during the same policy year, the restoration clause will trigger and the sum assured will be restored to the original amount for the policy year.

The clause may also specify the frequency and quantum of sum assured during a policy year. So, while some insurance policies may restore the sum assured amount once in a policy year, other policies may offer restoration for unlimited number of times in a policy year. Also, while most of the policies offer 100% restoration of the sum assured amount, there are few policies that offer 200% restoration during a policy year.

So, you will have to read the fine print carefully to fully understand the benefits of restoration clause in your health insurance policy.