One plus one offers work very well in retail products. The insurance industry, too, is trying to adopt a similar strategy to attract customers. In health insurance, four companies are offering to restore your health cover after you have exhausted it during the term. But unlike retail products, this doesn’t come for free but at a reduced premium. There are other caveats, too, to consider before you go for it.
A typical health insurance covers your hospitalisation expenses up to the sum insured you choose. These policies also cover daycare procedures and pre-and-post hospitalisation expenses, among other things. Apart from all this, restore health insurance policies give you another benefit. Once you exhaust the original sum insured limit, the plan restores the same sum insured for future hospitalisation during the same year. Next year again you start with the basic sum insured.
But in order to minimise its risk, the insurer restricts the new sum insured (in the same policy year) to new ailments. For instance, if you exhaust your sum insured due to hospitalisation on account of say a gastrointestinal ailment, the same sum insured will be restored, but can’t be used for the same ailment. You can’t stretch the original sum insured to use the top-up limit for an ailment. So if the sum insured is R3 lakh and your hospitalisation bill comes to R4 lakh, you would have to pay R1 lakh yourself. Subsequently, the insurer will top up your cover with an additional R3 lakh that you can use in case of hospitalisation due to an accident or some other ailment.
Plans and features
Religare Health Insurance Co. Ltd’s Care: For a 35-year-old opting for a sum insured of R5 lakh, this is the cheapest in the market for a premium of R5,162.
It offers the restore facility but comes with sub-limits on room rents for sum insured below R5 lakh. Says Anuj Gulati, CEO, Religare Health Insurance: “We believe in long-term sustainability of benefits and pricing. Therefore, by incorporating sub-limits on lower sum insured plans, we are able to optimize utilization and keep pricing sustainable for a longer period. For plans with sum insured of R5 lakh and above, we do not incorporate any sub-limits.”
Apollo Munich’s Optima Restore: Under its restore benefit, if an individual exhausts his cover in a year, the policy will reinstate the basic sum insured for the remaining year. It also rewards you with generous bonus if you don’t make a claim. A typical health policy gives you a bonus of 5%: your sum insured increases by 5% for the same premium. This bonus is, typically, capped at 50% of the total sum insured. Optima Restore, on the other hand, offers a 50% no-claim bonus. So a R3 lakh cover will become a R4.5 lakh cover for the same premium. If you don’t make a claim even in the second year, the sum insured will further increase by 50% or will double up.
But if you make a claim after that, the policy reduces your sum insured in that year by 50%. The sum insured doesn’t go below the basic cover as is the case with other policies, too.
Star Health’s Star Comprehensive Insurance Policy: This one is available only as a floater cover. It offers benefits such as hospital cash benefit and maternity benefits, but the restoration benefit is applicable only to the basic cover. A big disadvantage with this plan is claim-based loading. “Unlike other restore health policies that do not load your premium based on individual claims, this policy has a claim-based loading. So this is a big negative,” says Mahavir Chopra, head, e-business and personal lines, Medimanage.com, a health insurance consultancy.
General Insurance Co. Ltd’s My: health Medisure Prime Insurance: This is the most expensive of the four. Under its restore benefit, after you have exhausted the cover, the policy will restore the basic sum insured, but only in case of hospitalisation due to accident. Since accidents account for 5% of hospitalisation cases, this is a little restrictive. What makes this policy expensive is the in-built critical illness benefit. The sum insured for critical illness is double the base sum insured.
How to use these
The concept of having the sum insured restored is good, but you need to be careful. The restore benefit does not cover ailments for which the policy was invoked earlier.
“Restoration of sum insured will help the long-term health insurance buyer. Though the sum insured may not exhaust in one claim in the short term, of say next 4-5 years. In the long run, with hospital bills getting fatter and fatter, sum insured will exhaust, and restore will be useful,” says Chopra.
For those opting for a floater policy, the concept works well. “The one big negative of a floater policy was that if one member used up the entire sum insured, other members were left uninsured. But now the sum insured is restored. This feature completes the concept of a floater plan,” he says.
The health insurance market is finally tailoring products to suit your needs, but you need to tread with caution. Ensure that you have adequate insurance cover and settle for a plan that covers you comprehensively.