Indemnity Health Insurance Plan: Understanding its importance and benefits

When it comes to your, and your family's health, unplanned or planned hospitalisation should not be a time to worry about medical expenses. Health insurance is a secure and safe option to mitigate these medical expenses. This is where Indemnity Health Insurance comes to your rescue. Read on to understand what an Indemnity Health Insurance plan is and its benefits.

What is Indemnity Health Insurance?

Indemnity Health Insurance Policies are those health insurance plans where you are reimbursed the actual medical expense arising from hospitalisation. You can claim up to the limit of the sum insured as per the terms and conditions. An Indemnity Health Insurance can be purchased as an individual or as a family floater plan.

For example, if Mr A had to undergo a planned surgery in the hospital, the cost was Rs. 3 lakhs. He has an indemnity-based health plan with a coverage of Rs. 5 lakhs; then, his policy will pay Rs. 3 lakhs incurred as hospitalisation expenses.

The calculation is just for explanatory purposes, the actual numbers might differ based on the terms and conditions.

Importance of choosing Indemnity Health Insurance

Here are the reasons why you should choose an indemnity-based health insurance plan.

• Increasing healthcare costs

  Approximately, there is an increase of 8 to 10% in medical costs annually. Most treatments that require surgery may cost lakhs of rupees. An Indemnity Health Insurance takes care of these costly medical expenses. You don’t have to pay from your pocket since the indemnity-based health plan will take care of the same apart from the deductibles and expenses that are not covered by the policy.

• Reduce out-of-pocket expenses

  As mentioned previously, an indemnity-based health plan pays the entire medical bill except for the deductibles and other related expenses, in case of a planned or unplanned hospitalisation. Therefore, you avoid paying from your pocket.

Benefits of buying Indemnity Health Insurance

Here are the main advantages of choosing Indemnity Health Insurance.

1. Flexibility to select hospitals

   Usually, insurers offering this plan have a tie-up with a vast network of hospitals. It is an essential aspect since you have the power to choose the hospital based on your preferences. There is also the benefit of a cashless facility, thereby avoiding the scare of paying a high medical care bill up front and getting it reimbursed later.

2. Extensive coverage

   The indemnity-based health plans function on the principle of indemnity. The insurer pays the hospital bill for up to the sum insured. It even covers pre and post-hospitalisation expenses, ICU, room rent, surgery, diagnostic tests, medicines, daycare treatment, and in-patient treatment, including doctor fees. It also covers treatment expenses of Covid-19 infection as per the terms and conditions of the policy.

3. Low-cost plans

   Typically, fixed benefit health insurance plans, which provide a lump-sum payment, are considered expensive, and the premium is an essential factor while assessing the option to buy a health insurance policy. Most Indemnity Health Plans are offered with a deductible. It is the amount you are willing to pay from your pocket in case of claims. If you opt for a higher deductible, the cost of the health plan reduces. Since you are ready to pay from your pocket, it reduces the risk for the insurer, and you enjoy a low-cost Indemnity Health Insurance Plan.

How does Indemnity Health Insurance work?

When you are hospitalised and you want to use the Indemnity Health Plan you have opted for, the insurer pays the total amount of the medical bill except for deductibles.

For example when you raise a cashless or a reimbursement claim for Rs. 2.5 lakhs against the policy with a sum insured of Rs. 5 lakhs, the insurer pays Rs. 2 lakhs after considering the deductible of Rs. 50,000.

Most modern health insurance plans sold in India are indemnity-based health insurance plans. You can purchase the plan as an individual or as a family floater plan.

Cons of Indemnity Health Insurance Plans

There aren’t many disadvantages of indemnity-based health insurance plans. However, one of the primary downsides of indemnity-based health insurance plans is that it is subject to deductibles; hence, you have to pay a specific portion of the bill from your pocket.

Inclusions and exclusions of Indemnity Health Insurance

In general, most plans pay for.

• In-patient hospitalisation (a minimum of 24 hours of hospitalisation)

• ICU

• Pre and post-hospitalisation

• Daycare treatment

• Diagnostic tests

• Medicines

Here are some treatments that the policy may not be covered under the indemnity-based health plan.

• Consumables such as PPE kit

• Pre-existing diseases

• Pregnancy

• Cosmetic/dental surgeries

• Injuries in war, HIV, intentional injuries, congenital diseases

Note: This is not the full list of what is included and what is not. Please read the policy document or contact the insurance company to know more.

Indemnity Health Insurance Plan costs and deductibles

Like all health insurance plans, the pricing of indemnity-based health plans are based on several factors of the beneficiaries. These include age, pre-existing illnesses, the extent of the sum insured, the number of beneficiaries, etc. As for the deductibles, most indemnity plans have deductibles. Hence, you have to pay a certain amount from your pocket.

Key factors to consider Indemnity Mediclaim Insurance

Before you decide whether to buy indemnity-based health insurance, consider the following factors to get the maximum benefit.

• Typically, most indemnity-based health plans' cost is higher than a fixed benefit plan.

• Deductibles are considered when the insurer is settling the claim.

• Opt for a digital insurer such as ACKO for a seamless experience.

• Usually, there is a waiting period of 30 days before you can take advantage of the coverage.

Corona Kavach and Rakshak Indemnity Plan

Corona Kavach and Rakshak Health Insurance plans are Covid-19 specific health plans. However, the Corona Rakshak is a fixed benefit plan wherein you receive a lump-sum amount. Here are the coverage details of the Corona Kavach indemnity-based health insurance plan.

• Pre and post-hospitalisation expenses include the treatment cost, PPE kits, blood tests, ICU, oxygen, and doctor’s fees.

• Home care treatment as prescribed by the concerned doctor.

• Treatment of co-morbidities during the Covid-19 treatment.

• Ambulance cover

• AYUSH treatment

Note: Please go through your Corona Rakshak policy document to get the full list of coverages.

You can choose a sum insured of Rs. 50,000 to Rs. 5 lakhs in the Corona Kavach policy, while it is Rs. 50,000 to Rs. 2.5 lakhs in the Corona Rakshak plan. The policy term can be 3.5 months, 6.5 months and 9.5 months for both plans.

Difference between Fixed Benefit and Indemnity Health Insurance Plans

Both the health insurance plans provide financial coverage for medical treatments specified in the policy. But, how is the Fixed Benefit Health Insurance Plan different from the Indemnity Health Insurance Plan? Here is a comprehensive comparison between Fixed Benefit and Indemnity Health Insurance Policies to understand both better.

In a nutshell,

An Indemnity Health Insurance Plan is an ideal health plan if you are looking for a plan that provides broader coverage against most ailments, optimum medical protection and covers maximum medical costs. Typically, for comprehensive health insurance, you should opt for a plan that is an indemnity-based health plan and has the option to include a defined or fixed benefit such as a Critical Illness plan as an add-on.

Frequently asked questions

Here are some of the commonly asked questions about Indemnity Health Insurance Plans.

Who should opt for the Indemnity Health Insurance?

You should opt for the Indemnity Health Insurance Plan if you are looking for complete health insurance coverage for planned and unplanned hospitalisation. The plan does not offer a lump-sum payment towards a particular critical illness. It pays up to the sum insured amount stated in the policy.

Is opting for the Indemnity Health Insurance Plan worth it?

Opting for the Indemnity Health Insurance Plan offers you the scope of raising claims for an amount up to the sum insured. If you are looking for flexible and broad health insurance coverage, you should consider opting for the Indemnity Health Plan.

Should I get the Indemnity Health Insurance Plan even if I have mediclaim insurance through my job?

While the mediclaim insurance or Group Medical Coverage (GMC) plan offered by your company provides maximum coverage, it does have a gap where you must pay from your pocket for medical expenses. The GMC lasts only till you are part of the company, Thus, it is better to have individual health insurance. An indemnity Health Insurance Plan can help you cover these gaps and offer access to doctors and specialists of your choice that the Group Mediclaim Coverage may not provide.

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