Source: Good Money Eyeing
Health
insurance policies have feature name like Restore of sum assured or Recharge of
sum assured, there are some policies with a feature of Replenishment of sum
assured also. With the somewhat similar names, it leads to confusion in the
mind of buyer who starts believing that these might be one and the same thing,
which actually is not. It varies considerably in the actual benefits. This
article aims to understand in detail the restore or recharge feature provided by two leading Insurance companies.
Both
Restore and Recharge means reinstatement of the complete sum assured in the
policy year, but with different conditions.
What is Recharge of
Sum assured?
The
Recharge feature as taken from Policy
wordings, the explanation of Recharge of Sum assured is as
Under:
Recharge
is the Reinstatement of the Sum assured. If the claim is payable in the policy,
then the company agrees to automatically make the reinstatement of upto the sum
assured for that policy year only provided:
1)
Recharge
will be utilised only after the sum assured and No claim bonus has been totally
exhausted in that policy year.
2)
The
Recharge shall be available only for all future claims and not in relation to
any illness or injury for which a claim has already been admitted for that
insured person during that Policy Year
3)
The
total amount of Recharge shall not exceed the sum assured for that policy year
4)
The
Recharge amount will not be available in case there is only a single claim in
the policy year.
5)
The
balance of recharge amount shall be available during the policy year till it is
exhausted completely.
6)
Any
Unutilised recharge cannot be carried forward to any subsequent Policy Year.
To
understand the Recharge of sum assured in detail, below is the exhibit taken
from the policy wordings of Religare with some modifications(It is assumed that claim 1 and 2 are not related):
Now
what the above exhibit shows is that Recharge was not available for the first
claim, and as per the policy wording also recharge amount cannot be claimed for
the first/single claim in policy. But for second claim where the sum assured
was not proving sufficient, recharge gets activated and supported the claim
payment. There’s only one condition, which is that the claim where recharge
will be utilised should not be related to any of the previous claim in that
policy year. This means that if in all the scenarios above the Claim 2 was
related to claim 1 then No Recharge of sum assured benefit would have been
available.
What is Restore of
Sum assured?
Restore
is again the reinstatement of the sum assured in a policy but with different
conditions. The Restore feature is explained as follows:
If
the Basic Sum Insured and multiplier benefit (if any) is exhausted due to
claims made and paid during the Policy Year or made during the Policy Year and
accepted as payable, then it is agreed that a Restore Sum Insured (equal to
100% of the Basic Sum Insured) will be automatically available for the
particular policy year, provided that:
a)
The Restore Sum Insured will be enforceable only after the Basic Sum Insured
inclusive of the Multiplier Bonus ,have been completely exhausted in that year;
and
b)
The Restore Sum Insured can be used for only future claims made by the Insured
Person and not against any claim for an illness/disease (including its
complications) for which a claim has been paid in the current policy year;
c)
The Restore Sum Insured will only be applied once for the Insured Person during
a Policy Year;
d)
If the Restore Sum Insured is not utilised in a Policy Year, it shall not be
carried forward to any subsequent Policy Year.
Lets
try to understand the Restore feature through exhibit below (with the same
scenarios as was in exhibit above)(Restore is available for all non related claims):
The above exhibit clearly shows that Restore benefit will get activated
only when the basic sum assured plus accumulated bonus will become ZERO. As in the above example in the
case of second claim the sum assured was still there in the policy in all
scenarios, so the restore benefit does not get activated.
Which one is better
– Restore or Recharge?
First
thing first, your decision to buy any health insurance policy should not be
based on this feature only. You have to understand the various waiting periods,
sublimits, exclusions if any in a health insurance policy before taking the
decision to buy any.
Now
as far as among recharge and restore, on the face of it recharge looks much
better option. But the major drawback in both the options is that these are for
unrelated claims. If you are getting treated of some heart ailment and exhausts
your complete sum assured in a policy
year, you cannot claim out of Recharge or Restore unless the claim is for some
problem not related to heart. Second drawback, especially in restore is that it
gets activated only when the sum assured and no claim bonus is completely
exhausted.
So in
my view, one should look at the basic sum assured and take it to the maximum of
affordability. These restore and recharge option will be added benefit which
may or may not be used as they have certain condition attached to it.
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