HDFC Ergo Optima Restore vs HDFC Ergo Optima Secure – which is better? 

Sometimes health insurers provide similar policies that are difficult to differentiate. It is the finer points of the policies that make the difference. An example here is HDFC Optima Restore and Optima Secure.

In this report, therefore, we delve into the features of HDFC Optima Restore in the first section and assess how it compares to its close counterpart in the last section.

HDFC Ergo Optima Restore is part of our Prime Health Insurance recommendations. But Optima Secure also appears extremely similar – so why does the former alone find a place in our recommendations? 

About the insurer

HDFC Ergo is a joint venture between HDFC and ERGO International AG. It is a large private sector insurer in India and ranks 6th among all insurers in terms of total premium earned, 2nd among private insurers. The claim settlement history of HDFC Ergo has been good. The ratio of claim settlement by numbers and value at 86.41% and 85.49% respectively meets the 78.43% and 86.74% industry average. The efficiency in settlement – i.e, the proportion of claims settled within 3 months – at 95.32%, is also close to the industry average at 96.45%. All values are based on data for FY22. Please read this article to understand the claim settlement metrics.

Policy features

This policy is available for those aged between 18 to 65 years. Once the policy is purchased, it can be renewed for life. Dependent children of age 91 days and above can be added into the policy. The policy provides both individual and floater options. The policy offers a sum insured of Rs.3 lakh to Rs.50 lakh, which we think is more than enough for a basic policy.

What does it cover

Similar to most modern health insurance policies, HDFC Optima Restore covers hospitalisation (which is defined as admission in a hospital for a minimum period of 24 hours for procedures or treatments) and day care expenses (procedures that used to take more than 24 hours hospitalisation in the past, but are now completed in less than a day due to advancements in technology). 

Where it scores better than most policies is in the coverage of pre and post hospitalisation expenses. It covers 60 days of pre hospitalisation and 180 days of post hospitalisation expenses. Rarely do policies cover post hospitalisation expenses beyond 90 days.

Features that enhance the sum insured

Cumulative bonus is a feature that enhances the sum insured when no claims are made in a policy year. The insurer calls it a ‘2X multiplier benefit’, as this feature enhances the applicable sum insured by 50% for a claim-free year, effectively giving a ‘2X coverage’ after 2 claim-free years. The maximum bonus applicable is 100% of sum insured. Do note that other insurers also offer such bonuses on claim-free years depending on the policy; even so, it is a useful enhancement to any health policy.

Restore benefit is a feature where an insurer replenishes the sum insured if a claim has been made which can then be used for future claims. HDFC Optima Restore also offers such restore benefits, but the difference between this and other policies is that it can be applied even if the sum insured is only partially utilised. 

For instance, let’s consider a family floater policy with a coverage of Rs. 5 lakh for two policyholders. The first policyholder makes a claim of Rs. 4 lakh.Then, let’s say later in the same policy year, the second policyholder undergoes hospitalisation with a bill amount of Rs. 4 lakh. In usual applications of restore benefits, the policyholder will first be eligible only for the remaining Rs 1 lakh, only after which the restore benefit will kick in. However, since the HDFC Optima Restore allows for restore benefits even for partially utilised sum insured, the second policyholder is eligible to claim the entire Rs. 4 lakh.

Do note that the maximum restore benefits will not be above the sum insured. That is, the total value of restoration cannot exceed the sum insured. Let’s explain with an example. Consider a policy of Rs. 5 lakh sum insured and the following claims in a policy year:

• 1st claim: Rs. 3 lakh. Claim is paid by the insurer. The insurer restores the partial sum insured utilised. Available sum insured is now restored back to Rs. 5 lakh. Total sum insured restored in the policy year is Rs. 3 lakh.
• 2nd claim: Rs. 2 lakh. Claim is paid by the insurer. The insurer again restores partial sum insured utilised. Available sum insured is now restored back to Rs. 5 lakh. Total sum insured restored in the policy year is Rs. 5 lakh.
• 3rd claim: Rs. 3 lakh. Claim is paid by the insurer. The insurer will no longer restore the sum insured as the policy has already been restored by 100% of sum insured. Available sum insured for future claims is now Rs. 2 lakh.

Unlimited restore: This feature is an optional add-on. This is used to remove the limitation of maximum restore value in a policy year explained above. With this add-on, unlimited restores are available in a policy year. Given that restoration even with partial claims is available, it may appear that going for a small sum insured with the unlimited restore add-on can be an alternative for a policy with a higher sum insured. 

However, in our view, restoration is not a replacement for higher sum insured. The maximum amount payable for a single claim cannot exceed the sum insured. For example, a Rs.3 lakh sum insured, even with unlimited restores, can only pay up to Rs.3 lakh for a single claim. You will have to foot any amount beyond this. Therefore, a sum insured of sufficient coverage and a 100% restoration is preferable. To enhance the coverage beyond that at a later point, super top-up plans can be used. Read this article to see how much health insurance cover we recommend for each life stage.

Other features

Online discount: If the policy is bought online without any intermediaries, a 5% discount on first time and renewal is applicable. As we have always maintained, go for online policies only if you think you can handle any claim situation by yourself in the future. An agent may be helpful in dealing with the claim process.

Long term policy discount: The policy can be purchased for a 1 year, 2 years, or 3 years term. The 2 year and 3 year policy comes with 7.5%, and 10% discount, respectively, on the premiums.

Premium

HDFC Ergo Optima Restore has zone-based premiums, where major metropolitan cities are termed Tier I and rest of India as Tier II. Tier I premiums are higher than Tier II (See policy prospectus, page 15 for details on premium and Tiers) There are no-zone based co-payments applicable. However, if the insured’s address changes, they should update the insurer and move to the new Tier if applicable.

For all the comparison illustrations below, we will be looking at the Tier I premiums. The premiums for individual and family floater plans for HDFC Ergo Optima Restore stands against three comparable policies as below:

As is evident, the premium stands at the higher end. However, HDFC Optima Restore places itself as a premium offering with a set of features that differentiate it from lower-priced policies, especially in terms of sub-limits on room rents or on specified treatments/ procedures. These features have been explained in more detail in the section ‘Why do we recommend this policy’

Policy minuses

• Premium: If you are looking for specific coverage on a tight budget, this policy is not suitable for you.
• Permanent exclusions: A number of conditions and treatments are permanently excluded from this policy. These include treatment related to obesity, treatment of sterility, infertility etc. Please see the policy wordings, page 11 for full list of exclusions. However, these exclusions are pretty much the norm for all health policies.
• Maternity is not covered: Numerous policies either exclude maternity coverage altogether or impose stringent conditions that render it nearly unusable. However, given its position on the higher end of the premium spectrum, this exclusion in HDFC Optima Restore is a drawback.
• 3-year waiting period for preexisting diseases: Again, the waiting period is not significantly longer than the industry average, but at this cost, we feel it could have been shorter. There are policies such as ICICI Lombard Complete Health Insurance Plan Health Shield and Star Health Young Star Insurance come with shorter waiting periods.

Why do we recommend this policy?

• No sub limit on room rent coverage: Sub-limits on room rent are common in most health policies. Some policies limit room rent coverage to a fixed percentage of sum insured, which becomes very restrictive.This is an important point as typically, hospitals charge a higher amount for total procedure based on the type of room opted. Policies with room rent sub-limits (either value based or type of room based) apply these limits in proportion to the entire bill amount. When we recommend policies, the minimum we look for is that the policy should cover at least single private AC rooms. HDFC Optima Restore covers any type of room, whether single or deluxe or suite; as long as the total bill amount is under the available coverage, you can claim it. 
• Restore benefits: This is a useful feature to have, especially where there are multiple people under a policy. With added benefits of restoration even in the case of partial utilisation, this feature is more sweetened in this policy. The other aspect on which the restore benefits of HDFC Optima Restore appears different from competition is on the conditions for claims once sum insured is restored. Usually, policies mention that the restored amount is not available for the same disease and the same person. However, the policy wordings don't mention such a clause for HDFC Optima Restore. 
• No disease-wise sublimits: Many policies apply sub-limits to modern treatments (example: balloon sinuplasty, Robotic surgeries) or specific procedures. Even if some of these sub-limits may be enough to cover treatments at today’s expenses, such a clause will reduce the effective coverage applicable in the future as cost of treatments will continue to rise. With no such sub-limits applicable, HDFC Optima Restore places itself as a good candidate for long term health cover.
• Good claim settlement history: The claim settlement ratios of HDFC Ergo matches the industry standards.

HDFC Optima Restore vs HDFC Optima Secure

Unlike mutual funds, insurers are not limited to offering only one product in a category. HDFC ERGO, therefore, has HDFC ERGO Optima Restore and HDFC ERGO My:Optima Secure, both of which share several similarities and not just in their name. During our selection process, which heavily considers the insurer, we faced difficulty in choosing between these two. Here’s how the two compare. 

In terms of features we consider to be essential, both policies score equally well. Neither of them have co-payments or sub-limits. 

In terms of drawbacks, they also are on par with each other. For example, the waiting period for pre-existing diseases is 3 years for both Optima Restore and Optima Secure, which we believe could have been improved.

In terms of ‘extra’ coverage of the sum insured, HDFC Optima Secure is one notch higher - the ‘4x coverage’ that is heavily marketed. But this much-touted ‘extra’ is misleading and making a decision on this can leave you under-insured. Here’s what this 4X really constitutes:

1. Plus benefit: This is a 50% additional sum insured for a maximum of two years, effectively increasing the coverage by 100%.
2. Restore benefit: This is a feature that restores the sum insured when it has been used for a claim. Since the policy is offering 100% of the sum insured as the restore benefit, it counts as additional 100% coverage.
3. Secure benefit: This is a feature that enhances the base cover by 100%. It is claimed to increase the cover by 2X from day 1.

These three features make you eligible for up to 4 times coverage after two claim-free years. 

Now consider HDFC Optima Restore. It provides restore benefits same as HDFC Optima Secure. The cumulative bonus applicable in the case of HDFC Optima Restore is comparable to the Plus benefit of HDFC Optima Secure, increasing the sum insured by 100%, although the Plus benefit is better as it is not affected by claims. Collectively, these features can enhance the sum insured of HDFC Optima Restore by 3X, to borrow the HDFC Ergo’s terminology. 

That leaves the ‘Secure benefit’, or the enhanced base cover. Theoretically, you could take a policy with half the sum insured that you’re looking for since applying the secure benefit would double it from day one. You could both get higher cover and lower premium. But as always, what sounds good on paper may not quite work out in reality. 

The certainty of the secure benefit is the key here, if you are to attach any weight to this. A careful  examination of the policy wordings states: "An additional amount as specified in the Policy Schedule will be available to the Insured Person as Sum Insured for all claims admissible... The Secure Benefit will be applicable only after exhaustion of Base Sum Insured." (HDFC Optima Secure policy wordings: page 16-17)

This highlights two uncertainties:

1. The current secure benefit of 100% of the sum insured may not be guaranteed for the future. While 100% is the benefit currently offered, there is nothing preventing the insurer from changing this in the future. 
2. The clause stating that the secure benefit applies only after exhausting the base sum insured does not equate to an enhancement of the sum insured - it would entirely depend on how and at which point the insurer lets this enhanced cover kick in. For instance, let’s say you have a policy with a sum insured of Rs. 5 lakh and you make an initial claim of Rs. 4 lakh. Now, let’s say you need to make another claim of Rs. 2 lakh. Technically, the secure benefit is not yet applicable since the base sum insured is not yet exhausted. So, for this particular claim, you may face a shortfall (without accounting for any other sum insured enhancement features) depending on how the insurer applies the secure benefit clause.

Both these uncertainties mean that relying on this secure benefit to bump up your cover and manage your premiums is not a good idea. In our view, certainty in health cover is important. The best way to increase coverage and keep premiums under control is by utilising super top-up plans. 

While it is reasonable to rely on basic policies with additional features that enhance available coverage when you are young and have lower health coverage requirements, as time goes on, it becomes crucial to increase coverage with certainty. (Read: how much health cover you need) At this point, purchasing a super top-up plan with a deductible equal to the sum insured of your basic plan is advisable. This approach eliminates the reliance on additional features and bonuses, which often come with conditions attached.

Therefore, after careful evaluation, we ultimately recommend Optima Restore as the difference in features is not significant and premiums are likely to be lower than Optima Secure. In the age bands we reviewed, Optima Restore has a lower premium than Optima Secure, as indicated by the insurer's premium chart. Given that premiums are already on the higher end, forking out even more is not really necessary. 

However, we do acknowledge that premiums vary depending on actual final assessment by the insurer. Should you find that Optima Secure is cheaper than Optima Restore, feel free to go ahead with Optima Secure. Just ensure that you’re making the comparison for the same sum insured across two policies.

Final take

HDFC ERGO has a commendable claim settlement record, and the HDFC ERGO Optima Restore policy encompasses all the essential features without any sub-limits on specific treatments. Although the three-year waiting period may not be the most favourable in the market, it should not discourage younger individuals from purchasing this policy. Overall, if you are seeking a policy that provides extensive coverage, even at a higher premium cost, opting for this policy is recommended.