Understanding Indemnity Health Insurance

When purchasing a health insurance policy, selecting a suitable plan that caters to your requirements and provides coverage for the specific risks you may encounter is essential. There are two categories of health insurance: indemnity health insurance and lump sum benefit health insurance. Indemnity health insurance covers your general hospitalisation expenses, while  lump sum benefit health insurance provides predetermined coverage for specific diseases as stated in the policy.  

What is an indemnity health insurance plan? 

Individual health insurance plans are also called mediclaim insurance plans or regular health insurance. Indemnity-based health insurance policies cover the expenses incurred during hospitalisation up to the total sum insured. This means the insurer will pay for the treatment costs within the coverage limit. Indemnity health insurance policies can be availed as regular plans for families, individuals, or seniors. 

How does an indemnity health insurance plan work? 

As previously stated, these plans offer reimbursement for hospitalisation or medical treatment expenses up to the insured amount. For instance, if you have an indemnity-based health insurance policy with a sum insured of ₹5 lakhs and receive medical treatment that costs ₹2 lakh, your insurer will cover these expenses after deducting the non payables as per the policy terms and conditions. You need to provide the necessary medical documents and bills.

The remaining ₹3 lakh can be utilised for any additional medical expenses during the policy period. Any copay or aggregate deductible applicable for the policy will be deducted from the admissible amount which has to be borne by the Insured,.

Why should you buy an indemnity health insurance plan? 

To manage increasing healthcare expenses 

Healthcare costs in India are rising by 8 to 10% every year. If you require a complex surgery, it can cost a significant amount of money. By having an indemnity plan, you can easily handle these medical expenses reasonably incurred. However, it’s important to note that it doesn’t cover deductibles and other other non payables as mentioned in the policy.

Benefits of buying an indemnity health insurance plan  

This type of health insurance plan comes with a host of benefits, such as:

Flexibility in choosing hospitals 

Typically, insurance companies that offer indemnity health coverage have well-established partnerships with a vast network of hospitals and medical practitioners. This means that policyholders can choose the hospital or doctor they prefer for treatment. Additionally, the availability of a cashless facility ensures that the insured individuals need not worry about submitting bills, as the empanelled hospital takes care of it. 

Ability to make multiple claims 

The ability to file multiple claims is a valuable feature of this policy, allowing policyholders to submit various claims up to the insured amount.

Affordable premiums 

Health insurance policies can be expensive, and the premium cost is an essential factor to consider. Many indemnity health plans require a deductible, where the policyholder shares a percentage of the treatment cost with the insurance provider. This arrangement helps reduce the risk for the insurance company. 

Wide range of protective coverage 

One notable advantage of indemnity-based plans compared to defined benefit plans is their comprehensive coverage for a wide range of medical treatments and diseases, including COVID-19. An indemnity-based medical policy covers the actual hospital bill amount up to the maximum sum insured limit. Therefore, the cost of treatment is not a cause for concern if the insured individual has opted for an adequate coverage amount. 

Summary  

An indemnity insurance plan is the best option if you want a health insurance plan offering excellent medical coverage. It provides extensive protection against various illnesses and covers most hospitalisation expenses reasonably. It also allows you to benefit from cashless claims.