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Fixed Benefit vs Indemnity Plans – Know the difference

In India, more and more people are becoming conscious of health and fitness but still, there is a surge in the cases of lifestyle diseases and critical illness. With the increasing demand for medical services, their costs are also increasing and so is the need for health insurance. However, a large section of the population is still ignorant about the importance of health insurance and depend on their income and savings for their medical expenses. The reason for this ignorance is a lack of understanding.

People are not aware of the benefits of health insurance and various options available to suit various requirements. The most common health insurance is an indemnity plan, also known as Mediclaim, which covers the medical expenses incurred. There is one more type called fixed benefit which gives a fixed benefit irrespective of the medical expenses. Let us explore and understand fixed benefit vs indemnity plans.

Fixed Benefit Health Insurance Plan

A fixed benefit health insurance plan pays a fixed amount to cover expenses for a predetermined condition or illness like critical illness cover, cardiovascular diseases cover, personal accident cover, kidney function issues cover, daily hospital cash cover, etc. The fixed amount paid is the sum insured. This plan can be used as an additional cover to pay for expenses not covered by your existing health insurance. It works as an extra booster.

Key Features

  • It is an additional source of money that can be used to cover expenses that are not covered in a health insurance plan.
  • It provides a lump-sum payment of the sum assured on the first diagnosis.
  • It does not have any sub-limits for coverage of a medical condition.
  • It also looks after non-medical expenses such as loss of livelihood or earning during treatment.
  • It does not require a lot of paperwork to file an insurance claim. The policyholder requires only a diagnosis report from a certified doctor for filing a claim.

 

Drawbacks

  • Premiums of these plans are expensive compared to indemnity health insurance plans.
  • Coverage is limited to specific ailments only.
  • Some critical illness and cancer insurance covers have a survival period. Insured can get the fixed benefit only after completion of the survival period. If the insured dies before the completion of the survival period, the family does not get any compensation.
  • It does not cover actual medical expenses like hospitalization.

 

Indemnity-based Health Insurance Plan

An indemnity health insurance plan is a plan that covers the actual expenses of medical treatment up to the sum assured. It requires hospitalization of the policyholder or at least a daycare procedure. To file a claim a policyholder needs to submit all hospital bills with details of expenses incurred, duration of hospital stay, discharge date, etc. These plans have a deductible which is a pre-decided fixed amount to be paid by the policyholder and the remaining amount is reimbursed by the insurance company.

Key Features

  • It covers expenses for regular hospitalization of a wide range of ailments and medical procedures.
  • It allows multiple claims in a year within the sum assured limit.
  • The policyholder has the option of choosing from a list of hospitals and medical centres within the network of the insurance companies with the benefit of a cashless facility.
  • It is cost-effective and flexible health insurance.

 

Drawbacks

  • It does not cover any non-medical expenses during hospitalization.
  • It requires extensive paperwork. A policyholder needs to provide documents like medical bills, discharge summaries, diagnostic reports, cash receipts, etc.
  • It has a deductible where the policyholder has to bear some part of the medical expenses.

 

Fixed Benefit vs Indemnity Plans

When you invest in a health insurance plan make sure that you get adequate coverage. Choosing any health insurance plan may not provide the needed safety net. We should be prepared for any medical uncertainties. Before evaluating any health insurance plan consider your family’s medical history, your city and network of hospitals, sub-limits of your policy, coverage for pre-existing diseases and your overall health insurance requirements.

While studying fixed benefit vs indemnity plans understand that both have their unique advantages which cannot be ignored. If there is a history of critical illness in your family then adding a fixed benefit plan to your existing mediclaim is a necessity. Similarly, if you opt for a fixed benefit plan, always remember that once the claim is paid the plan is no longer valid. So an indemnity plan is needed for recurring medical expenses. A combination of both fixed benefit and indemnity plans can provide sufficient coverage for hospitalization as well as disease-related and non-medical expenses. Finally, understand your requirements and choose a health insurance plan accordingly.

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