What is Fixed Benefit Health Insurance and How Does it work?


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Policies which offer fixed amounts of sum insured to the policyholders are known as fixed benefit health insurance. Let us get more details on the Fixed Benefit Health plan and its functioning in this post.

When you consider a health insurance policy, the first thing that you want to know is whether the policy fulfills all your insurance needs. To ensure that your health insurance plan covers most of your health needs, you need to understand the various types of policies available. Health insurance plans are mainly of two kinds; fixed benefit policies and indemnity policies.

Fixed benefit health insurance plans are the ones that allow the insured to receive a fixed amount of benefit irrespective of the claims made. On the other hand, indemnity plans are the ones where the insured gets their claims reimbursed depending on the expenses of the treatment.

What’s Inside?

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What is a Fixed Benefit Health Insurance Plan and How Does it Function? 

As mentioned above, Fixed benefit health insurance plans are the ones that allow the insured to receive a fixed amount of claim irrespective of the expenses being made for a particular treatment. So, here you are sure to receive the fixed sum assured if you are diagnosed with the disease that you are covered for under the fixed benefit plan. Further, here the policy gets terminated once the claim is made by the policyholder and it is compensated by the insurer. So, this plan covers the specific diseases that the policyholder is insured for and it is not meant for regular costs of hospitalization incurred by the policyholder.

For example, let’s assume that you bought a fixed benefit health insurance plan for cardiovascular diseases for a sum assured of 25 lakhs. Now, if you get diagnosed with cardiovascular disease during the term of the policy, you will receive a confirmed amount of 25 lakh from the insurer irrespective of the cost being charged by the hospital for the treatment. Once the claim amount is paid, the policy will cease to exist.

Importance of Fixed Benefit Health Insurance Plan

Fixed benefit health insurance plans are important because they boost your regular health insurance plan with an extra amount. As in the above case, if you already have a regular health insurance plan covering some ailments, you can have an extra layer of financial security to cover the sky-rising expenses  for diseases that are not well covered by the regular plan.

Further, the benefit of getting a lump sum amount in one go is another important feature of the fixed benefit health insurance plan. This money can be used to cure the disease as well as fulfilling other requirements post treatment.

Moreover, the fact that the claim amount under fixed benefit health insurance plan doesn’t have any particular terms and conditions is another important aspect of the plan.

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Benefits of a Fixed Benefit Health Insurance Plan

Here are some benefits of Fixed Benefit Health Insurance Plans:

  • Fixed Benefit Health Insurance allow hassle -free compensation as you don’t need to provide many documents at the time of raising claims
  • These plans are available without any sub-limits
  • The single pay compensation received by the insured serves many purposes such as treatment expenses, post treatment expenses or regular household expenses (in case the bread earner is unable to work for a short period). Thus, you can use the extra money to compensate for family and kid’s expenses as well

Disadvantages of a Fixed Benefit Health Insurance Plan

Among the many disadvantages of the fixed benefit health insurance plan India include higher premium amount to be paid and restricted eligibility. Of course, the premium of fixed income health insurance plans is greater because they offer greater sum insured as compared to the indemnity policies. Secondly, these plans are restricted to certain kinds of illnesses, which is another limitation of the plan.

Difference Between a Fixed Benefit Plan and Indemnity Plan

Differences Fixed Income Health Insurance Indemnity Health Insurance
Meaning This plan compensates for certain predetermined illnesses that the insured has sought coverage for This is a comprehensive plan that covers the insured up to the sum assured and as per the policy terms for costs incurred for all medical treatments and diseases  mentioned in the policy
Pay-out The insured gets lump sum payment in case he/she gets diagnosed with the disease that the person is covered for Here, the policy compensates the insured up to the sum assured for any medical treatment specified under the plan at the time of purchasing the plan
Paperwork These plans allow very limited paperwork and documentations at the time of raising a claim These plans need more paperwork and copies of all the bills etc. while raising a claim
Tenure Policy gets terminated once the compensation is paid The policy expires when the tenure is over, which is fixed at the time of buying the policy

Read More: What are Health Insurance Riders and Their Relevance in India

Wrapping Up

Although Fixed Benefit health insurance plans have many advantages and serve as one of the best health insurance in India, they allow coverage only for certain illnesses that are pre-defined under the policy. Thus, it is important to choose a plan that covers the diseases that you want to get insured for. This way, you can have the maximum benefit of the plan.

Hence, it is important to evaluate the healthcare needs of your family along with the medical history. Also, you may seek coverage against the pre-existing diseases that you or any other member of the family is suffering from and check for any sub-limits in the plan. All these evaluations will help you in buying the best fixed benefit health insurance plan for you and your family.

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Nov 15, 2022
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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