What are the Benefits of Indemnity Insurance?


What are the Benefits of Indemnity Insurance?

When seeking medical treatments, cutting corners might be the last thing you want to do. Whether a hospitalisation is planned or unplanned, you would surely want to get the best possible treatment for yourself and your family members. While medical emergencies can arise unexpectedly, a health insurance policy acts as the strongest shield around you. Having the right kind of insurance can surely be the best way to prepare yourself for any such situation.

When it comes to health insurance, there are broadly two types: Indemnity health insurance and fixed benefit health insurance. In indemnity health insurance, your generic hospitalisation expenses are covered. On the other hand, in a fixed-benefit health insurance plan, as the name suggests, a fixed amount is paid out when you are diagnosed with a disease that is covered by the policy.

Indemnity in insurance is one of the most popular kinds of health insurance plans. It is also called a mediclaim insurance or a regular health insurance plan. Let us understand more about this kind of insurance. Read on as we discuss what is indemnity insurance, how it works and also the principle of indemnity.

What is Indemnity Insurance?

The indemnity meaning in insurance stands for the agreement between two parties when one agrees to pay for another party’s potential loss. Simply put, the indemnity principle of insurance is basically compensation. So, in case you are hospitalised, your health insurer will cover the costs of the treatment, typically up to the sum insured of your policy.

How does Indemnity in Insurance Work?

When you purchase a health insurance plan, you pay the insurer a specific amount of premium, generally for a year. During this year, if you require hospitalisation, the medical expenses will be covered by the company. Let us take a look at an example here:

Sushmita Singh bought an indemnity health insurance plan of INR 10 lakhs  covering herself, her husband and 3-year-old daughter. A few weeks later, Sushmita’s husband got hurt in a car accident. He had to be hospitalised for 3 days, and his hospital bill was INR 2.5 lakhs. This amount was paid by the insurance company. A few months later, Sushmita had to be operated upon as she was diagnosed with gallbladder stones. Her medical bills were around INR 5 lakhs. This time, too, as she was still under health insurance coverage, her bills were cleared by the insurer. The remaining insurance amount of INR 2.5 lakhs, which Sushmita still has,  can be used during the policy year.

What are the Benefits of an Indemnity Health Insurance?

As the name suggests, an indemnity health insurance policy works primarily on the principle of indemnity. The insurance company will either reimburse your medical expenses or pay for them directly to the hospital on your behalf. In today’s world, when every day one hears of some new-found disease, the right coverage can save you from digging into your savings.

There are other benefits that you can get when you invest in an indemnity policy. Here are some of them:

Indemnity Health Insurance Offers Extensive Coverage

The principle of subrogation is applicable to all contracts of indemnity. Therefore, these plans will cover the medical expenses up to the sum insured limit. While the coverage of each plan differs, you can generally get coverage for:

  • In-hospital expenses
  • Room rent charges, ICU charges
  • Investigations and diagnostic screenings
  • Pre and Post-hospitalisation expenses
  • Surgical expenses
  • Ambulance charges.
  • Domiciliary Coverage
  • OPD cover

Cashless Hospitalisation Works as a Blessing

Imagine, in a road accident, a loved one gets injured and requires a surgical procedure. You need to pay the hospital INR 5 lakhs for them to start the treatment. Do you have this much money with you right away? Would you want to spend all of your savings in a flash? These thoughts are scary.

This is why cashless hospitalisation can work as a blessing in an already stressful time. Your medical bills will be cleared by the insurance company without you having to run around.

Affordable Premiums

Generally, indemnity health insurance plans are considered to be affordable. You can compare the premium with the expenses of hospitalisation. High medical inflation has raised the prices of healthcare treatments. Your health plan will turn out to be way more affordable than the unexpected treatment costs.

>> Also Read: Boost your Health Insurance Coverage with Add-on Covers

Difference between an Indemnity Policy and a Fixed Benefit Policy

When you are looking for a health insurance plan, it is obvious that you would want to go with the best option possible. Understanding the differences will help you decide whether you need to pick one or go ahead with both. Read the differences between an indemnity policy and a fixed benefit policy in order to make a well-informed decision.

Details Indemnity Policy Fixed Benefit Policy
Purpose The policy covers you for incurred expenses on hospitalisation A pre-determined sum insured is paid to you on the diagnosis, typically a critical illness
Claim You can either file a claim for reimbursement or go for cashless treatment if your insurer allows You need to inform the insurer and provide the “Investigation Report”
Coverage You can have wider coverage with indemnity health insurance The lump-sum payout can act as a second income or help you cover the costs of the treatments required
Cost Indemnity health plans come with affordable premiums. You may have the advantage of paying the premium as EMIs as well. The premiums are typically higher as compared to indemnity health insurance.

To Sum Up

When looking for health insurance for yourself and your family members, indemnity health insurance is generally a preferred choice. It offers you comprehensive coverage. At a network hospital, you can enjoy the facility of cashless coverage, while at a non-network hospital, you can go for reimbursement.

An increasing number of diseases, a sedentary lifestyle, and hectic routines make it all the more necessary for you to be invested in a health insurance plan that offers you maximum coverage. At Care Health Insurance, we offer you a long list of indemnity policies for you to choose from. Depending on your preference and requirements, you can choose the one that suits you and your budget the most.

Disclaimers: The above information is for reference purposes only: Policy Assurance and Claims at the underwriter's discretion.

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