Jun 22, 2020 (0) comment , , ,

In India, most insurance plans come with a fixed sum insured. This means that the insurance provider is liable to cover the cost of treatment only up to that amount. If the cost of treatment exceeds sum insured, one has to bear the additional bill from his or her own pocket. This is the reason why it is essential to make a correct estimation of likely cost of treatment in the event of a medical emergency.

However, a good amount as sum insured does not necessarily remove all risks. This is because one may face a situation where he or she might require medical attention multiple times during policy period. For example, if the sum insured gets exhausted in the beginning of the year to treat infection such as malaria, the person may not get coverage if he or she meets with an accident during later part of the year. Such situation could lead to financial crisis.

In this blog, Secure Cover explores the reset benefit in health insurance and how a person can avail health insurance cover despite exhausting the sum insured during the policy period.

Why exhaustion of sum insured is a cause of concern?

As mentioned earlier, the insurance provider is not liable to provide cover to the policy holder after the sum insured gets exhausted. Let us examine with the help of an illustration where a person might require Reset.

ILLUSTRATION: Suppose a person, say Ram, has Mediclaim policy with sum insured of up to Rs. 5,00,000. If during the beginning of the year, he meets with an accident and undertakes treatment at hospital whose cost comes out to be Rs. 5,00,000. If he makes claim of Rs. 5,00,000 and the insurance provider accepts it, he will be compensated for the treatment cost.

However, since his Sum Insured is Rs. 5,00,000, his treatment cost has led to the exhaustion of that amount the insurance provider is not under any obligation to provide cover.
If a person requires coverage for a disease, illness or accident treatment, he or she will have to (Scenario 1) either wait till the policy period is over or renew the policy after it expires or, (Scenario 2) purchase a new policy by paying full premium.

Both of these options are not feasible. In case of former scenario (Scenario 1), the policy holder will have to postpone treatment which is not possible in case of serious illness or injury. In case of later scenario (Scenario 2), the policy holder will end up paying full premium for remaining part of the year.

So what is the Solution?

In order to address this problem, health insurance companies now offer reset option wherein, a person can get up to 100% reset on the sum insured. This reset benefit may be provided by Insurance provider, either free or at a minimal cost. This means that even if the sum insured is exhausted, the person can get the fresh sum insured of almost the same amount during that policy period.

Benefits of Reset

– They help a policy holder remain covered during the entire year even if the sum insured has got exhausted.

– Since reset facilities are like top-up plans, they are comparatively less costly than the regular premium.

– Plans such as family floater plans provide reset benefits for the entire family thereby providing cover to the family even if the treatment cost of one individual led to exhaustion of the sum insured.

– If the sum insured is not exhausted completely, then the reset also leads to addition of the remaining sum to the new reset sum insured.

– For those diseases that have waiting period, reset does not require the person to go through the waiting period again if it has already been completed.

Things to keep in mind while understanding reset benefits

While availing reset benefit, one must note that claims under reset option do not cover for previous injuries. They only provide cover for future illness or injuries not related to previous claim. This is done in order to avoid misuse of the reset plan. If the cost of medical treatment exceeds the sum insured, one cannot get a reset and use the new sum insured to meet the treatment cost exceeding the sum insured during earlier treatment.

In Conclusion

Reset benefit helps a person and his or her family remain insured for the entire duration of the policy period. It not only saves cost but also ensures that the person does not have to go through the entire waiting period once again which he or she might have to in case of purchase of new plan. However, reset benefits only provide cover for future treatment and do not cover those injury and illnesses during pre-reset period.

Disclaimer: The content of this blog is based on personal research of the writer. Reader’s discretion is advised. Neither Secure Cover nor the writer will be held responsible for any wrongful interpretation of the content of this blog.

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