Health insurance is a serious requirement for everyone, and people have definitely warmed up to this idea. Nowadays, many medical insurance companies have introduced new features such as Recharge of Sum Assured along with Restore of Sum Assured. The name of these features sound alike and it is understandable that it could be confusing to buyers. The truth is that both these features differ in the benefits that they offer.
Recharge of Sum Assured
Essentially, recharge means the replenishment of the total sum that is assured. If the particular claim being made is payable as per the policy, the company shall mechanically reinstate the sum assured for the specific policy year if the Sum Insured amount gets reduced owing to an earlier claim that has been disbursed.
This is subject to certain factors. Specifically, it cannot be used for any claim regarding illnesses/ injuries for which the person has already been admitted in that particular year of the policy. The complete recharge sum does not go beyond the assured sum for that particular policy year.
Moreover, the Recharge sum balance can be availed through the year of the policy, till its imminent conclusion. Lastly, any amount that has not been used from the Recharge is not carried forward in the following policy year as it ceases to exist.
For example, let’s consider Mr Gupta has a family floater health policy with a sum assured of Rs 500,000 when he was hospitalised for a serious knee injury and exhausted Rs 350,000. This expense is effectively deducted from the Sum Assured. In the same year his wife got hospitalized due to a viral infection and incurred a bill of Rs 200,000. Due to the Recharge feature, the Insurance Company would refill the Sum Assured after the disbursement of Mr Gupta and the entire claim of his wife can be fulfilled from the Sum Assured.
Restore of sum assured
If the basic Sum Insured amount and the accumulated bonuses (if any) are exhausted fully during the course of a treatment, the Restore benefit will refill the amount up to the basic Sum Insured for that policy period.
The Restore sum insured is available only for future claims and not for any issues related to claims that have already been paid in the specific year. This Restore sum can be used just once during the specific year. And if it is not used in the current policy year, then it does not automatically carry forward to the next year.
For example, let’s consider Mrs Sharma has a family floater health policy with a sum assured of Rs 500,000 when she was hospitalised for a serious knee injury and exhausted Rs 350,000. This expense is effectively deducted from the Sum Assured. In the same year her husband got hospitalized due to a viral infection and incurred a bill of Rs 200,000. This time her husband would have to pay Rs 50,000 out of his pocket and the rest Rs 150,000 would be disbursed by the insurance company. The Restore feature would now come into action and it would replenish the Sum Assured.
What works better?
There are multiple factors that go into deciding your specific medical insurance policy. Some of them include waiting period, exclusions, sub-limits etc. When it comes to the question of Recharge versus Restore, it does seem like Recharge is a better option.
Yet, there is an issue with both these choice as the problem of unrelated claims is common to both. Let us say that you have a cardiac problem that has depleted your entire assured sum for the current year. In that case, you will not be able to make use of Recharge or Restore. These options will only be available for any claims that exist outside of heart treatment. Another drawback is that the sum assured comes into plan only after the sum assured as well as no claim bonus is used up. This is true for the Restore option.
The main difference between the two is that the Restore option can be availed only after you have completely finished your basic sum assured. The Recharge option, on the other hand, is available even if the claim amount made by the insured individual goes beyond the basic sum assured. This is in regard to a second claim in the same policy year.
With the Restore option, ensure that you are holding a good amount of medical cover as these plans work best along with a floater policy. With the Restore option though, the sum insured gets refilled, with your family members being able to use your covers. Your choices depend on your immediate and future medical needs!
(By Rahul Agarwal, Founder CEO, 121policy.com)