With the rising costs of health care, insurance plans have become essential these days.
With the rising costs of health care, insurance plans have become essential these days. For individuals who want to benefit from these policies without having to pay high premium regularly, fixed and indemnity plans are the best options.
Fixed benefit health insurance plans pay a lump sum benefit if a claim occurs. This benefit is independent of the actual medical expenses that the policyholder incur.
Under this plan, as Sudha Reddy - HEAD - Health and Travel - Digit Insurance says, policyholders can opt for a sum insured and in case of an illness, mostly a critical illness, that is covered by the insurer he/she can get the entire amount of the sum insured irrespective of the hospitalization expenses.
Reddy explains this with an example.
“For instance, if an individual has taken a 5 lakh sum insured and is diagnosed with any covered critical illness, he/she will get the entire 5 lakh,” she explains.
On the other hand, indemnity plans are those which cover the actual medical expenses incurred in a medical emergency. The expenses covered are based on the actual expenses that have been incurred up to the total sum insured of the plan.
According to Dhirendra Mahyavanshi, Co-Founder, Turtlemint, the most common example of an indemnity health plan is a comprehensive health insurance plan.
“Under this, if the policyholder is hospitalized and incur a medical bill of Rs 1.75 lakh for the same, then the payment towards that claim would be up to a maximum of Rs 1.75 lakh, even if the total health insurance plan may be of Rs 5 or 10 lakh,” he explains.
Basically, a fixed benefit health insurance plan can be an additional plan, over and above an indemnity health plan.
"The actual cost for hospitalization can be covered with the indemnity plan whereas the other associated expenses like loss of income, cost of keeping a help or a nurse at home, diet control, etc. can be covered with the fixed benefit claim, if the policyholder suffers from any critical illness," Mahyavanshi opines.
These are expenses related to the ailment, but since it is not a direct expense for hospitalization, it is not covered by any indemnity health insurance plan.
In words of Mahyavanshi, “However, if he/she feels that the risk for any specific ailment like cancer, critical illness, personal accident, etc. is high and all necessary expenses might not be covered by an indemnity health plan, he/she can opt for a fixed benefit health plan for the same."
This means a fixed benefit plan can be availed to supplement the coverage. Policyholders need to assess the risk and then evaluate accordingly.
A fixed benefit health insurance plan would pay a lump sum benefit which would help the policyholders in meeting the financial obligations in a medical emergency. This could complement the total coverage, especially a critical illness policy, for a wider scope of coverage and provide additional financial assistance.
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First Published: IST