Health insurance plan: Protect yourself with reinstatement benefit

While it will safeguard you from the possibility of exhausting your sum insured, understand the nitty gritty before buying

Even if you have a health insurance policy with a reasonably large sum insured, such as Rs 15 or 20 lakh, there is always the risk that the amount may fall short in certain circumstances. One way to overcome this risk is to buy a policy that offers the reinstatement of sum insured benefit.

This feature is known within the industry by several names: recharge, reload, regain, refill, restore, reassure, etc.

How does it work?

Suppose that a family has a floater policy with a sum insured of Rs 10 lakh. A family member falls ill and the bill comes to, say, Rs 10.5 lakh. The sum insured gets fully exhausted. If another member falls ill, the expense will have to be borne by the family.

“But if the policy offers the replenishment benefit, the sum insured gets restored,” says Siddharth Singhal, business head-health insurance, Policybazaar.com.

In the above example, if the policy has the restore benefit, the insurance company would automatically recharge the policy, which means it would once again have a sum insured of Rs 10 lakh for use within the same policy year.

Must-have feature

In India, very few people have policies with sum insured of more than Rs 20 lakh. But what if a person falls ill repeatedly?

Sometimes, as happened during Covid-19, several members of the family could be hospitalised at the same time. “In such a circumstance, a floater policy with a limited sum insured would prove inadequate,” says Bhabatosh Mishra, director-underwriting, products and claims, Niva Bupa Health Insurance.

In the case of a critical ailment also, the sum insured of a normal policy can fall short. “If kidney failure occurs, a person could require regular dialysis followed by a kidney transplant. Similarly, in the case of cancer, the patient could require radiotherapy, chemotherapy, hormone therapy, surgery, and so on,” says Mishra.

With the reinstatement of sum insured benefit, out-of-pocket expenditure can be avoided.

Are such policies expensive?

Experts say plans with this feature are not that costlier. “The restore benefit is now offered as an in-built feature within the base plan, so customers can avail of it without having to pay an additional premium. The differential premium would be nominal compared to the benefit accrued,” says Nayan Goswami, head-sales & service, SANA Insurance Brokers. He adds that only when you buy this benefit as an add-on cover, would you have to pay an additional premium.

Checks you must run

Partial or full exhaustion: Check when the reinstatement of sum insured gets triggered. Suppose that you have a policy of Rs 10 lakh sum insured and a claim of Rs 5 lakh arises. If the reinstatement benefit gets triggered, that is referred to as partial exhaustion. On the other hand, if the reinstatement benefit gets triggered only after the entire Rs 10 lakh sum insured is exhausted, that is called full exhaustion. “It is prudent to opt for a policy that offers reinstatement on partial exhaustion,” says Goswami.

Same disease coverage: Suppose that a person has a heart attack causing the base sum insured to be exhausted. The reinstatement feature is triggered. In some policies, the restored sum insured can only be used for the treatment of another disease (not heart attack, in this example). In others, it can be used to treat the same disease also. Go for the latter type of policy.

Maximum amount: In some policies, the sum insured is restored up to 100 per cent. In others, the restored sum insured is restricted to 50 per cent. In yet others, it could be as high as 200-600 per cent of the base sum insured. Understand what you are getting.

Maximum usage: In some policies, the sum insured gets restored only once in a policy year. In others, such as Max Bupa’s recently launched Reassure 2, the sum insured is restored an unlimited number of times.

Carry forward: While in most policies the unutilised restored sum insured can’t be carried forward to the next policy year, some policies allow it.