Indemnity Health Insurance: Should You Buy This Policy?

When you buy a health insurance policy , you must choose the right plan that suits your needs and covers the specific risks you need. Due to the rising medical cost, many people choose a defined-benefit plan over indemnity-based plans. However, indemnity plans have their unique advantages.

An indemnity health insurance policy is the one where the insurance company reimburses the actual expenses you incur during hospitalisation. The maximum amount you can get as compensation is limited to the sum insured of the policy. You must submit adequate proofs and medical bills while filing a claim.

Let us assume you have purchased an indemnity-based health insurance policy with a sum insured of Rs. 5 lakhs. Suppose you get admitted to the hospital for liver infection treatment, and the total expenses incurred is Rs. 2 lakhs. In that case, the insurer will pay the amount after you submit the necessary bills.The remaining amount remains unutilised, and you can use it for your future medical needs. However, on the down-side, based on policy terms and conditions, the pre-hospitalisation and post-hospitalisation expenses may not be covered under your indemnity healthcare plan.If you are wondering if you should buy indemnity health insurance, knowing the benefits will help you make the right decision. Let us look at its benefits:

• Flexibility to choose the hospital The insurance companies that offer indemnity health insurance plans usually have a tie-up with a vast network of hospitals and doctors across cities. This means, as a policyholder, you have the flexibility to choose the desired hospital for treatment, which is known as the network hospital.Also, when you can avail of treatment at the network hospital, you can enjoy the cashless claim benefit . This means you need not pay a single penny from your pocket. The insurer will directly settle the bill with the hospital.
• Extensive coverage Unlike the defined-benefit health insurance policy, the indemnity health insurance plans provide coverage against a wide range of illnesses and treatment options. Also, since these plans cover the actual hospital bill, you need not worry about the treatment cost if you have a policy with a high sum insured.
• Affordable premium Many people still consider health insurance as an unwanted expense mainly because of the high premium cost. Most indemnity plans come with a deductible where the policyholders share a certain percentage of the overall medical expenses. Consequently, the insurance company faces lower risk, and they pass the benefit to the policyholder in terms of a lower premium.

Thus, indemnity-based health plans have an affordable premium as compared to other healthcare policies.

Thus, if you are looking for health insurance that provides optimum protection and has an affordable premium, an indemnity-based policy could be ideal. But, make sure that you carefully read the terms and conditions before you sign the policy documents.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.