Healthcare inflation in India is increasing at an alarming rate and currently is at 14%. Though there is an increase in life expectancy of people, lifestyle diseases and infectious illnesses are rising year on year. With technological advancement and rising medical inflation rates, a minor health issue can also dent a hole in your pocket. Availing an indemnity-based health insurance plan has become an absolute necessity. Let us understand more about indemnity health insurance.
What does indemnity mean in health insurance?
‘Indemnity’ in health insurance refers to the promises made by one party (i.e., the insurance company) in a health insurance contract to compensate for the loss (pay for the actual hospitalisation expenses) to another party (i.e., the insured).
What is indemnity health insurance?
Indemnity health insurance is a health insurance plan that reimburses the actual hospitalisation expenses within the limits of the policy. Individual health insurance plans, family floater health plans, and senior citizen health insurance plans are all indemnity-based health insurance plans. There are also fixed indemnity health insurance policies available which are referred to as fixed-benefit health plans such as critical illness insurance.
Let us understand how these indemnity health insurance plans work with an example. Mr. X has an indemnity health insurance with a policy limit of INR 5 lakhs. Let us say his hospitalisation bill at the time of discharge is INR 3 lakhs. In this case, Mr. X will be reimbursed the total actual hospital bill i.e., INR 3 lakhs from the insurance company. He would still have INR 2 lakh (INR 5 lakhs – INR 3 lakhs) left for utilisation for the policy period. It is important to note that the above example is for illustration purposes only. The actual amount of reimbursement depends on the terms and conditions of your health insurance policy.
Similarly, if Mr. X had opted for fixed indemnity health insurance with INR 5 lakhs, the lump sum benefit of INR 5 lakh would have been paid as compensation for the diagnosis of a covered illness.
What are the benefits of indemnity health insurance?
Indemnity health insurance offers numerous benefits that make it essential to have for every individual. Let us look at the benefits:
Flexibility
The indemnity health insurance plans come with many flexibilities and freedom of choice. With a wider network of hospitals listed with the insurance provider, you can choose your preferred hospital and doctors. A cashless hospitalisation facility helps you get quality treatment at the right time without having to incur any out-of-pocket costs. Even if your preferred hospitals are not there in the network list, the coverage is not denied to you. You can also customise the coverage as per your and your family’s health insurance needs.
Comprehensive cover
Indemnity health insurance policies provide comprehensive coverage that includes inpatient hospitalisation, pre- and post-hospitalisation, domiciliary hospitalisation, daycare procedures, and many other expenses incurred during medical emergencies.
Reimbursement benefit
In case you get healthcare treatment from hospitals that are not listed in the network hospital of your insurance provider, the amount of actual hospitalisation expenses is reimbursed to you by the insurer. All you need to do is settle the bill out of your pocket and then claim it from the insurance company. You need to submit the discharge summary and other medical records along with the reimbursement form.
Higher deductibles
Unlike managed healthcare services, indemnity-based health insurance gives you the freedom to choose the deductibles. You can choose higher deductibles to reduce the health insurance premium.
The features and cost of indemnity health insurance may vary depending on the insurer chosen, type of plan, etc. It is important to note that indemnity health insurance is different from professional indemnity insurance for health and safety consultants. The latter gives financial protection to health and safety consultants against liabilities arising from professional negligence.
Conclusion
Indemnity health insurance plans are crucial for every individual to have a financial safety net during any medical emergencies. It is important to understand the policy, what it covers, general exclusions, and other clauses before you buy. Ensure to do comparative shopping to make the right choice that suits your needs.