RESTORATION OR TOP-UP? Choose the benefit that works best for you

Last Updated 23 February 2021, 10:44 IST

The restoration and top-up options come with their unique benefits. Which of these would be more suitable for you? Here is your answer.

The world that we live in today is full of uncertainties. A virus, which did not even exist till a year ago, has already claimed almost 2.5 million lives while infecting almost 110 million people across the world[1]. Even if one looks beyond the pandemic, occurrence of critical illnesses is also on a rise in India. Almost 17.3 lakh new cases of cancer were diagnosed in India last year with over 8.8 lakh deaths due to the disease[2]. Moreover, cases of heart diseases are also rising in the country with their prevalence increasing by over 50 per cent in the last 30 years[3]. Hence, health insurance plans have become a basic necessity considering the rising costs of medical treatment, increased vulnerability to illnesses and the prevailing uncertainty on the pandemic front.

In case of an emergency, your health insurance policy will come in handy to set off most of the medical costs that are incurred with hospitalisation. A large number of people are at a higher risk of medical emergencies given the present day lifestyles. Hospital expenses can erode all your savings pretty fast.

Cover and tax relief

The pandemic and exorbitant costs of treatment[4] have clearly underlined the need for medical insurance cover - mediclaim policy. Mediclaim is a form of insurance where the insurer reimburses the policyholder the specified medical expenses. The insured can claim reimbursement of medical expenses incurred, subject to the policy conditions and limit. You can opt for a cashless facility also, if provided under the policy. This is subject to the policy’s conditions.

You can avail a policy for yourself, your family members as well as your parents. In addition to the medical security, the premium paid qualifies for an income deduction under Section 80D of the Income Tax Act that can help you save some taxes.

Options in cover

You can either get an individual policy - for each person separately - or explore health insurance plans for family that cover all the loved ones under one policy. In addition, there are medical policies for senior citizens. Also, there can be separate policies for critical illness that cover diseases such as cancer, kidney failure, heart diseases etc.
Some insurance companies also provide a separate medical cover for diseases like dengue and now, Covid-19.

As an add-on, you can also take a personal accident cover that provides cover against accidental death, permanent partial/total disability and temporary total disability.

A mediclaim policy generally covers expenses of hospitalisation, including doctor fee, surgery, ward charges, and cost of medicines during the hospitalisation. Some policies may also cover daycare treatment - medical treatment that doesn’t require hospitalisation and the patient is discharged in less than 24 hours after being treated as an outpatient. The policies cover both pre- and post-hospitalisation expenses for a specified number of days.

Restoration benefit

Most insurance companies offer restoration and top-up benefits with your health insurance policy, although they could come with an additional cost.

In case of a policyholder opting for restoration benefit, the insurer restores the sum assured if it is exhausted in the policy year. So, the policy offers insurance cover even if you have used up the entire sum assured in a year. For example, if a person has a mediclaim policy for Rs 5 lakh, and exhausts the said amount, say against COVID-19 treatment expenses, he/she cannot make another claim during the rest of the policy year if he/she again falls sick. However, if the policy comes with a restoration benefit, the policyholder can get another Rs 5 lakh as sum insured in the same year and can file another claim up to Rs 5 lakh during the policy year in case of another hospitalisation.

A restoration benefit is available within the same policy and can be claimed only after the base sum insured is exhausted. Of course, you might have to pay an additional premium for this facility, depending upon your insurance company and policy. The additional amount you can claim depends on the policy amount, your age, cover availed, medical history etc. Further, there may be additional conditions attached to the benefit. Usually, the balance is replenished when the entire sum insured is exhausted.

When restoration benefit works well

The restoration benefit is very useful in a family floater policy. Even if one member of the family uses up the entire sum assured, the other members can still remain covered. There may be conditions attached, such as the restoration benefit not being available to the same person again in the given policy year, but will be available for other members insured in the policy. It may also be that the same member cannot use the restored sum assured for a related condition, but can claim for some other unrelated condition. There may also be time restrictions or gap between claims during a year.

Top-up benefit

A top-up policy is like a backup plan which gets triggered when you have exhausted the sum assured in your health insurance policy. These plans are cheaper than a regular health insurance policy, however they come with a threshold limit called deductible and would cover costs only over and above that limit.
For example, assume you have availed a base policy of Rs 5 lakh and top-up of Rs 10 lakh with a deductible of Rs 2 lakh. In this case, let’s further assume you make three claims - Rs 6 lakh, Rs 1.50 lakh and Rs 4 lakh respectively. So for the first claim, you will be reimbursed Rs 5 lakh from your base policy and Rs 1 lakh from your top-up plan. In case of the second claim, there will be no reimbursement since the claim is less than the deductible amount of Rs 2 lakh. In case of a third claim, the top-up will pay Rs 2 lakh after applying the Rs 2 lakh deductible.

So, a top-up is a separate cover and has an aggregate deductible and cover limit.

When top-up benefit works well

With a regular mediclaim policy, you can claim medical bills up to the sum insured while a top-up plan covers costs after a certain threshold is reached. Top-up health policies are indemnity policies and provide the same benefits as regular reimbursement plans. The only difference is the high deductibles that make these plans cheaper. Also usually, a top-up plan covers only a single event of hospitalisation. A top-up plan can be availed only if the hospital expenses exceed the deductible during a single hospitalization. In case of a higher deductible amount, the premium is lower.

It is to be noted that you cannot have a restoration benefit without purchasing a base health insurance policy. However, you can have a top-up plan without buying a base health insurance policy. The initial expenses up to the deductible amount will need to be borne by the insured. The balance expenses, over and above the deductible amount, will be borne by the insurance company, subject to the top-up cover. It works well in case of claims of high amounts.

If you choose to go for a top-up policy, you can consider Extra Care Plus Policy from Bajaj Allianz General Insurance, which not only offers you the extra protection while making a claim, but also comes with maternity cover, emergency ambulance cover, pre-existing diseases cover, and pre and post hospitalisation cover. Not only it allows entry till the extended age limit of 80 years, with Bajaj Allianz Extra Care Plus Policy, you don’t need to worry about pre-policy health checkups till the age of 55.

Read terms carefully

While you compare health insurance plans & go for a policy with a top-up or restoration clause - you should understand the riders and various clauses well. Especially, all that is covered, what is not covered and the conditions for claims should be clearly understood before choosing the policy.

Another factor to consider is the claim settlement process which should be simple and hassle-free. So it is always better to go with an insurer that has an in-house team for quick, smooth and easy claim settlement. Also, choose an insurer that allows you to switch from another insurer with all accrued benefits. Health insurance plans by Bajaj Allianz General Insurance ticks all the right boxes when it comes to these parameters. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.


This article is part of a featured content programme.
(Published 19 February 2021, 12:15 IST)

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