Health insurance is considered as a slightly unwanted expense and premium outflow does play a major role.
By Nisary M
A health insurance plan must be selected after understanding one’s needs and risks. For some, it may be about the final premium outflow while for others it may be getting coverage for a certain high risk disease that may run in the family.
Rising costs of both pre-and post-hospitalisation has meant that many opt for defined benefits plans that cater to these needs, over indemnity-based plans. However, indemnity-based plans have their own set of benefits.
An indemnity-based health insurance plan is one where the health insurance company reimburses the actual amount incurred as expenses during hospitalisation. The amount paid is subject to the maximum sum insured under the policy post the submission of adequate proof and medical bills.
For example, let us assume a policyholder has an indemnity health insurance plan with a sum insured of Rs 5 lakh. Now, if the policyholder gets operated for a hernia surgery costing Rs 2 lakh, the insurance company will pay, post bill submission, for the actual expenses incurred. The remaining amount continues to be left unutilised for any future medical needs. On the downside, any pre- and post-hospitalisation expenses are not covered under indemnity health insurance plans.
Even with the non coverage of post-operative expenses, indemnity insurance plans come with a host of benefits for the policyholder.
Flexibility to choose hospitals
Insurance companies offering indemnity plans have a tie-up with a large network of hospitals and doctors. This means the policyholder is free to choose the desired hospital or health care professional for treatment. Availability of cashless indemnity health insurance plans also mean the policyholder does not have to worry about bill submission, which is done by the networked hospital.
Wide range of protective cover
Unlike defined benefit plans, indemnity-based plans cover a wide range of treatments and illnesses. Also, indemnity-based health plans will cover the actual amount of the hospital bill subject to the maximum sum insured limit. So if a policyholder has opted for adequate coverage, the cost of treatment is never a worry.
Low premium outgo
Health insurance is still considered as a slightly unwanted expense and premium outflow does play a major role. Most indemnity health plans come with a deductible whereby the policyholder shares with the insurance company some percentage of the overall cost of medical expenses. As a result, the health insurance company faces lower risk, which it passes on as lower premium to the policyholder.
When it comes to opting between an indemnity health insurance and a defined health benefit plan, the individual medical needs of the policyholder must take center stage. If you are someone with a high risk of a medical ailment running in the family or looking for a lump sum payment for treatment, a defined health plan catering towards that disease is a better option.
However, if you are looking for a health insurance plan that offers optimum protection, covers majority of ailments, caters to majority of the hospitalisation charges with a budget friendly premium, indemnity health insurance plans are your best friend. Ideally, for a comprehensive cover, both indemnity and defined benefit plans should be opted for.
The write is founder, Hermoneytalks.com and partner, Hubwords Media