All You Need to Know About Fixed Benefit and Indemnity based Health Insurance
Over the past decade, health and wellness have become extremely important topics in India as the pursuit of a healthier lifestyle has encouraged people to adopt cleaner diets and exercise regularly. This boom has been so big that the fitness industry, which was earlier waiting to be organized, witnessed phenomenal growth. As per a CII-Deloitte India report, the fitness industry crossed $1.1 billion in 2017. But, despite increased awareness, the road to holistic health remains an uphill battle. Working out and eating right has reached the top of the priority list, but most Indians are still hesitant about taking the extra step of buying health insurance coverage.
A 2017 study by Milliman, titled ‘Indian Life and Health Insurance Sectors’, revealed that only 44% of the 1.3 billion people in India have a health insurance policy. It also stated that while 76% of the population didn’t have any health cover in 2013-14, the number dropped to 56% during 2016-17. A huge chunk of the population relies on income or savings to fund treatment leading to financial crises. The situation only gets worse in case of critical illnesses. The ‘Call For Action: Expanding Cancer Care in India’ report by Ernst & Young reveals that the baseline cost of cancer treatment is higher than the annual income for over 80-85% of households. In an ecosystem, this volatile, health insurance is extremely important for our physical and financial well being.
Buy Insurance Based on Your Lifestyle Requirements
In India, the lack of insurance penetration is largely due to misinformation. A large section of the population, including people who are health-conscious, are clueless about what they should be looking for. Therefore, to avoid financial hardships related to medical expenses, it is important that we explore various types of health insurance that are designed as per our age and lifestyle. Also, as we grow older, stress increases, and chances of heart disease, diabetes, hypertension, stroke, and cancer creep in. To deal with these issues, it is important to consider factors like age, the right combination of premium and coverage, hospitalization benefits, no-claim benefits, co-payment clause, claim benefits, and preventive health check-ups among others.
Indemnity Plan or Defined Benefit Plan? Which is better?
Due to the unpredictability associated with ailments, simply buying health insurance might not always provide the safety net we are looking for. Our requirements from a health insurance policy changes depending on the seriousness of the emergency, like a minor ailment or life-threatening, hospitalization duration, ailment management after being discharged from the hospital, etc. Therefore, buying health insurance that covers both hospitalization expenses and disease-related expenses is the best way to go.
An Indemnity Plan is a health insurance plan that reimburses the actual expense incurred during hospitalization up to the pre-defined limit under the scheme. The amount that is reimbursed depends on the sum insured by the policyholder. The unutilized amount after an indemnity claim is made can be leveraged for medical needs in the future.
Makes private hospitalization cheaper
Experts recommend indemnity plans as essential health insurance for many reasons. In India, the cost of healthcare is enough to blow a hole into one’s savings. The longer the hospitalization, the heftier the medical bill. This is one of the biggest reasons where an Indemnity Plan comes in handy.
Indemnity Plans offer flexibility by letting you choose the hospital, doctor, and healthcare service. Insurance companies that offer indemnity plans collaborate with a wide network of hospitals and doctors so that policyholders don’t have to compromise on their needs and choices by choosing a primary care doctor. They can self-refer to specialists as well and, in many cases, cashless indemnity health insurance plans do away with the bill submission process performed by the hospital.
Wide range of hospitalization pay-outs
Indemnity Plan keeps policyholders at the forefront. It covers the hospitalization treatment cost for several ailments. Because these plans cover the actual expense incurred during hospitalization, a policyholder can seek the best treatment depending on the payout that his/her policy offers.
Choose between family floaters or individual plans
Indemnity Plans are further divided into two categories: Individual Plans and Family Floater Plans. Individual plans have to be bought in the name of one individual; whether it is yourself, a parent, a spouse, or a child. Many insurers offer discounts if more than one member of the family is insured simultaneously. On the other hand, the Family Floater plan allows more than one member to be covered under the same plan, with the premium being based on the age of the eldest member. Depending on family medical history, the right policy should be chosen.
Low premium rates of Indemnity Plans makes it popular among the masses. The insured usually avail a certain percentage of the total cost incurred which reduces the risks for the insurer and allows the delivery of plans at lower premiums.
Defined Benefit Plans: The Extra Booster
While Indemnity-based health insurance plans go a long way in easing the burden, your health insurance coverage shouldn’t end there. For a 360-degree cover, it is necessary to further protect oneself with Defined Benefit Plans; a type of health insurance coverage designed to provide financial safety against critical illnesses. Here, the entire sum insured gets paid to the policyholder if a predefined ailment sets in. This plan doesn’t include hospitalization charges and offers a lump sum payment to the policyholder. This pre-defined payment is independent of the expenses incurred during treatment and requires the policyholder to submit only the diagnosis report by a certified doctor to claim the amount. This plan gives the insured the flexibility to use the lump sum amount as per one’s convenience.