Should you buy an Indemnity Health Insurance Plan?

Due to the increasing cost of pre-and post-hospitalization expenses, many people nowadays opt for defined benefits health insurance plans over indemnity-based policies. However, indemnity-based mediclaim policies have their own set of benefits, especially when it comes to coronavirus health insurance cover.

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    What are Indemnity Health Insurance Plans?

    Indemnity-based health insurance policies are medical insurance policies where the insured is paid for the actual hospitalization expenses incurred during the treatment up to the total policy sum insured amount. It means that the insurer will pay the treatment cost within the limit of the coverage amount of the sum insured. Indemnity type health insurance policy can be a regular health insurance plans for family, individual health plans, health policy for senior citizens, and COVID-19 health plans.

    So, when you opt for cashless hospitalization, a certain fixed amount (deductible) is paid by you to the hospital and the remaining amount is settled by the health insurance company. And if you have not opted for cashless hospitalization, then you would need to submit all the essential medical reports, hospital bills, and other medical documents. Based on the documents the insurer will compensate the expenses.

    For example, Mr. Prakash has a health policy with a sum insured of Rs 10 lakh. He undergoes treatment in a hospital and the total cost is Rs 5 Lakh. Now the insurer will pay only Rs 5 lakh as per the policy clauses, and the remaining Rs 5 lakh can be used for further hospitalization during the policy term.

    On the downside, and indemnity mediclaim policy does not cover pre- and post-hospitalization expenses are not covered under indemnity health insurance plans. Even when post-operative expenses are not covered, indemnity policies come with a host of insurance benefits for the policyholder.  Especially during the coronavirus treatment indemnity based corona kavach health insurance plan for family is quite useful. We will discuss that in the latter part of this article.

    Benefits of Indemnity Based Health Insurance Plans

    Indemnity plans provide flexibility to choose hospitals

    Usually, Insurance companies providing indemnity health cover have a tie-up with a large network of hospitals and medical practitioners. It implies that the policyholder is free to choose the desired hospital or the doctor for treatment. The availability of a cashless facility also means that the insured does not have to fret about bill submission, as it is taken care of by the impaneled hospital.

    Indemnity plans offer a wide range of protective cover

    One of the noticeable benefits that indemnity-based plans have over defined benefit plans is coverage for a wide range of medical treatments and diseases including COVID-19. An indemnity-based medical policy will cover the actual hospital bill amount subject to the maximum sum insured limit. So the cost of treatment is not a matter of concern if the insured has opted for an adequate coverage amount.

    Lower premiums

    Health insurance policies are still considered a costly affair and the premium cost does play an important role. Most of the indemnity health plans come with a deductible where the policyholder shares some percentage of the treatment cost with the insurance provider. As a result, it reduces the risk for the insurance company.

    And when you have to decide between a defined health benefit plan and an indemnity health insurance plan, the individual medical needs must take the center stage. So, if someone is at a high risk of an illness running in the family or needs a lump sum payment for medical treatment, a defined health plan covering that disease is a better option.

    Indemnity-type Corona Kavach health insurance

    It is a standard indemnity-based medical insurance policy that is being offered by insurance companies in India to cover Covid-19 related hospitalization expenses. The policy coverage, terms, and conditions remain identical across all the insurers.

    You can choose a sum insured amount of Rs 50,000 to Rs 5 lakh for self and family members, subjected to the age criteria of 1 day to 65 years. The policy term can be 3.5 months, 6.5 months or 9.5 months.

    Corona Kavach Indemnity Plan

    Amid the ongoing pandemic, more and more people are buying this indemnity based coronavirus policy. The types of expenses covered are given below subject to the specified limits under each head:

    • Pre, post and hospitalization expenses including the cost of treatment, blood tests, PPE kits, ICU, oxygen cylinder and doctor’s fees during the hospitalization
    • Treatment for co-morbidities during the Covid-19 treatment
    • Home care treatment as suggested by the doctor
    • AYUSH treatment
    • Road ambulance cover

    The policy can be easily purchased online from Policybazaar from any of the health insurance companies that are listed on the website.

    In a nutshell

    So, if you want to buy a health insurance plan that ensures optimum medical protects, provides comprehensive coverage against the majority of ailments, covers maximum hospitalization charges at an affordable premium, then an indemnity health insurance plan is what you are looking for. Ideally, for an all-inclusive health cover, both indemnity and defined benefit mediclaim plans can be purchased as per your choice.

    Written By: PolicyBazaar - Updated: 26 July 2021

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