Why Should You Buy an Indemnity Health Insurance Plan


4 min read

Updated on Jul 13, 2022

Indemnity Health Insurance Plans: Purpose and Benefits

Whether you are earning thousands or lakhs, all of us need to save our hard-earned money. We should make it a point to keep some money saved for rainy days as well as for healthcare needs. As a matter of fact, healthcare expenses are so high these days that it becomes really tough to get the right treatment at the best hospitals in India. This is one of the prime reasons why buying health insurance plans is important.

Well, the majority of us get confused with terms related to the health insurance industry. One of them is indemnity insurance.  So, let us today talk about indemnity insurance.

What is an Indemnity Health Insurance?

An insurance policy that reimburses the expenses incurred in medical treatment is called indemnity insurance. Let us take an example to explain it more easily. Varun underwent medical treatment in the hospital and the expenses incurred were INR 3 lakh. He has an indemnity insurance coverage of INR 4 lakh. In this case, his insurance provider will pay INR 3 lakh that was incurred as medical costs. Varun still will have INR 1 lakh cover remaining, so that he can use it during the policy period if need be.

5 The benefits of hospital indemnity insurance

Many policyholders question buying indemnity insurance. Well, here are some of the reasons for choosing an indemnity insurance plan.

1. Growing health care costs

Health care has become one of the most expensive sectors these days. And it is not only in India but across the world. Each year, medical inflation grows at around 5%. And if the treatment needs surgical procedures, it will cost a few lakhs. Arranging some lakhs can be a bit challenging for many Indian families. When you have an indemnity insurance policy, these things are taken care of. If the hospitalization is cashless, the patient who is also the insured does not need to pay anything from his/her pocket. This is a great relief for the patient and his/her family at that point.

2. The flexibility in choosing hospitals

In general, insurance companies that provide indemnity health cover come with a tie-up with a huge network of hospitals. This means a policyholder can very easily choose a hospital or medical practitioner of his/her preference for treatment.

3. Protective covers

One of the best benefits of having indemnity health insurance which you may not find in any other insurance plan is coverage provided for various types of medical treatments as well as ailments which even include COVID-19. The actual medical bill amount is covered by an indemnity insurance plan; however, it is subjected to the maximum sum insured limit. Therefore, if the policyholder took a sufficient coverage amount, the medical expenses should not be a cause of concern.

4. No out of the pocket expenditure

In case of an illness or an accident, if the health care coverage pays for the entire hospitalization expenses, you can avoid the put of pocket costs. Even in case of a co-pay or deductible, a huge portion of the expenses will still be saved.

5. Lower premiums

Many people refrain from buying a health insurance policy as the premium amount can be a bit much for them to pay. However, in the case of an indemnity insurance policy, it is not like that. The majority of the indemnity insurance plans come with a deductible. This means the insured will share a percentage of the treatment expenses with the insurer. This ultimately lessens the risk of an insurance company.

Other advantages of having an indemnity health insurance

  • Emergency ambulance
  • Expenses of supplies, treatment, and consultation fees
  • Pre as well as post-hospitalization care
  • Choice of the network of hospitals across the country

When do you need hospital indemnity insurance?

Does the question “do I need hospital indemnity insurance” often arise in your mind? Well then, let us talk about the situations when one such health insurance plan becomes helpful.

  • When a policyholder suffers from a chronic illness such as any kind of heart ailment or diabetes, which may lead him/her to hospitalization.
  • If the policyholder is an expecting mother or has plans of having a child in the future, she needs coverage for days in the hospital after the child is born.
  • If the policyholder has a surgery that is upcoming along with hospitalization.
  • In case of an accident, additional coverage is needed.
  • If the portfolio of the policyholder has a high-deductible health insurance policy.

Also Read: How To Avoid Expensive Hospital Fees With A Medical Insurance Plan?

How much does an indemnity health insurance plan cost?

The costs of an indemnity insurance plan may vary based on the various aspects and the type of plan that you choose. You must compare the plans that are available so that you can have a fair idea of how much they can cost. Some plans come with daily payouts, which totally depend on the premium amount that is paid by the insured.

The premiums are always decided based on several factors such as age, gender, geographical location, and deductible amounts. The cost of premiums and the payout amounts may differ across the insurance companies. However, before you finalize a plan, you must consult an insurance advisor and collect some quotes.

To get the best out of one such plan, you should go for one that is a combination of indemnity and define-benefit. You can look for such insurance plans online. There are several websites that you can use to find information about the best hospital indemnity insurance plans and even can buy those.

Jun 07, 2022
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PayBima Team
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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