 "Top-up health plan better than restoration option")
When you enter into the 40s, your spouse and you may start experiencing health-related concerns that did not exist when you were younger. That's when the sum assured on the health insurance policy begins to appear paltry, especially if the policy was purchased a few years earlier and you have not revised its sum assured since. To combat the high rate of medical inflation, one option may be to shift to a policy with the restoration benefit, while another may be to buy a top-up plan.
Restoration benefit
If you have a mediclaim with the restoration benefit, the insurer will reinstate the entire sum assured immediately if you exhaust it during a policy year. Moreover, there is no loading on next year's premium for using this benefit. Say, you have a health insurance of Rs 10 lakh. You run up a bill of Rs 8 lakh due to accidental injuries and the policy reimburses it. After a few months there's another claim of Rs 5 lakh. If you owned a regular policy, you would have got only the outstanding Rs 2 lakh from the policy. The remaining Rs 3 lakh would have to be paid out of your own pocket. However, in a policy with the restore benefit, you will get the full Rs 5 lakh.
Health insurers reinstate up to 100 per cent of the sum insured in a year. In effect, you are covered for double the amount of your sum assured.
This feature is most suited for families covered under floater plans. In case a member falls seriously ill, there are chances that the cover gets exhausted, leaving the other members without a cover for the remaining part of the policy year. Restoration benefit automatically replenishes the cover for any hospitalisation that occurs for other members.
Not surprisingly, policies with restoration benefit cost slightly more than a standard health plan. For instance, a regular Rs 5 lakh indemnity plan would cost a 35-year-old around Rs 5,500 annually, while a plan with the restoration benefit would cost Rs 6,500-7,000.
The catch
Restoration policies, however, come with a proviso. Says Sandeep Patel, MD & CEO, Cigna TTK Health Insurance: "The restored sum insured can only be used for any other illnesses or diseases not related to the ones for which a claim has been settled. For example, if your previous claim was for diabetes, you can't again make a claim for any hospitalisation related to that illness."
Under floater plans, the illnesses are individual specific and each ailment is treated as a fresh case.
Top-up plans
Another option for increasing your cover is the top-up plan. "Due to the inherent limitations of the restoration benefit, a combination of a basic health plan and a top-up plan makes a good protection solution. Though buying the two products may cost slightly more, the benefits are also bigger," says Patel.
A top-up plan does not come with the "claims for different ailments only" clause. It kicks in once you cross the basic threshold deductible limit and pays for all ailments, irrespective of whether a similar claim has been made during the year.
A top-up cover also offers you the flexibility to choose a higher cover. If you have a base cover of Rs 5 lakh, you can opt for a top-up cover worth Rs 10 lakh. In a restoration plan, the maximum limit to which the cover is restored is 100 per cent. To ensure comprehensive protection, opt for a super top-up policy instead of a regular top-up plan. In case you choose a regular top-up policy, the expense of a single treatment should be over the threshold deductible limit for you to get a claim. If this limit is Rs 3 lakh, and you have two claims during the year of Rs 2.5 lakh each, a regular top-up plan will not make any payout. In a super top-up plan, on the other hand, if your total expenses in a year (the aggregate of all your claims) exceed the threshold deductible limit, the insurer pays. In the above case, the super top-up plan would pay you Rs 2 lakh (the amount above the threshold of Rs 3 lakh).
Weighing the pros and cons of a policy with the restore benefit and a top-up policy, Jacob says: "A top-up plan helps people address their need to mitigate increasing medical expenses at affordable rates. It is useful for those with a group cover or low sum insured policies, or those who can afford to spend the first few lakh out of their own pockets." As for who should opt for a policy with the restore benefit, he says: "Such a policy is beneficial for families that want to maintain a specific premium payout, but enjoy continuous coverage in case of medical exigencies."
Restoration benefit
If you have a mediclaim with the restoration benefit, the insurer will reinstate the entire sum assured immediately if you exhaust it during a policy year. Moreover, there is no loading on next year's premium for using this benefit. Say, you have a health insurance of Rs 10 lakh. You run up a bill of Rs 8 lakh due to accidental injuries and the policy reimburses it. After a few months there's another claim of Rs 5 lakh. If you owned a regular policy, you would have got only the outstanding Rs 2 lakh from the policy. The remaining Rs 3 lakh would have to be paid out of your own pocket. However, in a policy with the restore benefit, you will get the full Rs 5 lakh.
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Says Antony Jacob, chief executive officer (CEO), Apollo Munich Health Insurance: "Policies with the restoration benefit offer a double safety blanket. They not only provide protection against high healthcare costs, but also restore a insured's sum insured when it gets exhausted during the policy period, for any other illness in the same policy year, without any extra premium."
Health insurers reinstate up to 100 per cent of the sum insured in a year. In effect, you are covered for double the amount of your sum assured.
This feature is most suited for families covered under floater plans. In case a member falls seriously ill, there are chances that the cover gets exhausted, leaving the other members without a cover for the remaining part of the policy year. Restoration benefit automatically replenishes the cover for any hospitalisation that occurs for other members.
Not surprisingly, policies with restoration benefit cost slightly more than a standard health plan. For instance, a regular Rs 5 lakh indemnity plan would cost a 35-year-old around Rs 5,500 annually, while a plan with the restoration benefit would cost Rs 6,500-7,000.
The catch
Restoration policies, however, come with a proviso. Says Sandeep Patel, MD & CEO, Cigna TTK Health Insurance: "The restored sum insured can only be used for any other illnesses or diseases not related to the ones for which a claim has been settled. For example, if your previous claim was for diabetes, you can't again make a claim for any hospitalisation related to that illness."
Under floater plans, the illnesses are individual specific and each ailment is treated as a fresh case.
Top-up plans
Another option for increasing your cover is the top-up plan. "Due to the inherent limitations of the restoration benefit, a combination of a basic health plan and a top-up plan makes a good protection solution. Though buying the two products may cost slightly more, the benefits are also bigger," says Patel.
A top-up plan does not come with the "claims for different ailments only" clause. It kicks in once you cross the basic threshold deductible limit and pays for all ailments, irrespective of whether a similar claim has been made during the year.
A top-up cover also offers you the flexibility to choose a higher cover. If you have a base cover of Rs 5 lakh, you can opt for a top-up cover worth Rs 10 lakh. In a restoration plan, the maximum limit to which the cover is restored is 100 per cent. To ensure comprehensive protection, opt for a super top-up policy instead of a regular top-up plan. In case you choose a regular top-up policy, the expense of a single treatment should be over the threshold deductible limit for you to get a claim. If this limit is Rs 3 lakh, and you have two claims during the year of Rs 2.5 lakh each, a regular top-up plan will not make any payout. In a super top-up plan, on the other hand, if your total expenses in a year (the aggregate of all your claims) exceed the threshold deductible limit, the insurer pays. In the above case, the super top-up plan would pay you Rs 2 lakh (the amount above the threshold of Rs 3 lakh).
Weighing the pros and cons of a policy with the restore benefit and a top-up policy, Jacob says: "A top-up plan helps people address their need to mitigate increasing medical expenses at affordable rates. It is useful for those with a group cover or low sum insured policies, or those who can afford to spend the first few lakh out of their own pockets." As for who should opt for a policy with the restore benefit, he says: "Such a policy is beneficial for families that want to maintain a specific premium payout, but enjoy continuous coverage in case of medical exigencies."