Personal Finance

Refill your health cover

Puneet Sahni | Updated on January 16, 2018 Published on October 16, 2016

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Restoring benefit to your policy can help you in case of unforeseen events

‘Reinstatement’ or ‘restore benefit’ is a word that you may have come across in the context of health insurance policies. Here we explain what it means and how this could be a great help to you in case of unfortunate events.

Reinstatement or restoration is an opportunity to once again make available the sum insured that was originally exhausted due to claims. This benefit is of great value proposition for all health insurance customers.

Conditions for reinstatement

There are quite a few products available in the market providing this benefit but we all need to take this information with a pinch of salt.

This is because most of the products that offer reinstatement are available with strings attached. For instance, one of the most common conditions is that reinstatement or the restore benefit is available only for different illnesses and not for the same illness.

This can be understood by the following example: Mr A suffered from cancer and had to undergo chemotherapy, due to which his sum insured of ₹5 lakh was exhausted. Unfortunately, he had a vehicular accident and developed a fracture following it. If he has a health insurance policy with reinstatement benefit, the reinstatement sum insured would be available for utilisation towards hospitalisation.

However, if Mr A had to undergo further chemotherapy sessions, then this reinstated sum insured is not available for utilisation.

Also, an important point to note in most policies is that reinstatement kicks in only on complete exhaustion of the sum insured and cannot be utilised for partial exhaustion. However, the above restrictions that are explained are not applicable to all policies.

There are certain policies in the market that offer full reinstatement without any conditions! Such policies essentially provide a double sum insured at half the price, which means if you buy a sum insured of ₹10 lakh, the sum insured available for utilisation is equivalent of ₹20 lakh. Such policies are truly reinstatement benefit policies.

A third point that requires your attention is that reinstatement is never available for the first claim. For example, if you have a policy of ₹10 lakh and made a claim of ₹11 lakh, then you will not get the benefit of reinstatement in that claim, but you would still get the restoration of the sum insured in your account for future utilisation within the same policy period.

Not so expensive

Whenever you wish to buy a policy that has reinstatement benefit, pay close attention to the conditions of reinstatement.

If you find it difficult to understand insurance jargons, check with your insurance agent or the company call centre for an explanation of the terms of utilisation of the reinstatement benefit.

Also, you may note that both health insurance policies with reinstatement benefit or simple health insurance policies without reinstatement benefit provide coverage with almost a similar range of premiums.

For example, premium for a health insurance policy with reinstatement benefit for sum insured of ₹10 lakh for a 30-year-old individual would be in the ₹10,000-₹12,000 range.

Ensure that your policy has good reinstatement benefits, so that you remain fully prepared for unfortunate events.

The writer is Head of Product Development, SBI General Insurance

Published on October 16, 2016
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