When you buy health insurance, it is essential to read every document of the contract carefully before providing your signage, as there might be hidden clauses that you may be unaware of. On the other hand, there is also a major advantage to a medical insurance policy in the name of recovery benefit. Are you aware?
What is a Recovery Benefit?
Recovery benefit is called by many other names such as a Restore benefit or a Refill benefit. Under the clause of recovery benefit, if the total amount of money that you insured gets depleted because of the treatment of a disease or ailment; the medical health insurance company is liable to pay the entire amount to restore it.
Understanding with the help of an example
Let us take the example of Rob. Rob is an IT worker who has purchased a health insurance plan of a total of INR 10 Lacs. In the worst case scenario, if Rob is diagnosed with a serious medical ailment such as renal failure or kidney problem, he will exhaust his insured money within the first 4 to 6 months of his treatment plan. This is due to the rising costs of the medical industry.
After 2 months, Rob is in the hospital again, but this time due to a cardiac arrest. He uses up INR 2 Lacs in the first 2 months of the treatment. In such a worst case scenario, it is up to the medical health insurance company to pay your insured amount to restore the total. As a result, Rob gets an extra coverage of INR 10 Lacs in the first policy year.
Therefore, in this situation, even the treatment for his heart condition expenses will be covered for up to the amount of INR 10 Lacs.
Hence, Rob would get medical health insurance coverage of INR 20 Lacs for the price of INR 10 Lacs. But, this may sound too good to be true.
Where is the drawback?
If the Basic Sum Insured and multiplier advantage [if any] is depleted due to declarations made and paid during the Policy Year or made during the Policy Year and accepted as payable, then it is concurred that a Restore Sum Insured [equal to 100% of the Basic Sum Insured] will be repeatedly accessible for the particular policy year, provided that:
- The Restore Sum Insured will be enforceable only after the Basic Sum Insured comprehensive of the Multiplier Bonus under Section IV have been completely depleted in that year; and
- The Restore Sum Insured can be used for declarations made by the Insured Person in respect of the advantages stated in Section I;
- The Restore Sum Insured can be used for only future declarations made by the Insured Person
- No Multiplier Bonus under Section IV will apply to the Restore Sum Insured;
- The Restore Sum Insured will only be applied once for the Insured Person during a Policy Year;
- If the Restore Sum Insured is not utilized in a Policy Year, it will not be carried forward to any succeeding Policy Year.
- In the case of Family Floater policy, Restore Sum Insured will be available for all Insured Persons in the Policy.
Exclusion: Disease/ailment for which a claim has been paid in the current policy year under Section I.
What does this mean?
The Recovery benefit policy will be applicable only for future declarations and claims only for un-related diseases and ailments.
If Rob was undergoing treatment for renal failure for which the total bill amounted to INR 15 Lacs, he would have had to pay the remaining INR 5 Lacs from his own bank account. Why is this? Because the recovery benefit will be used only for a subsequent claim.
In other words, a health insurance plan which includes the policy of recovery benefit is an absolute essential.
Reference Sources
https://www.personalfinanceplan.in/should-you-purchase-a-health-insurance-plan-with-restore-benefit/