Health insurance needs vary from person to person and largely depend on the age and lifestyle of the individual. People often ignore post-hospitalisation expenses, which can be higher than hospitalisation, while buying a health insurance plan. Choosing between indemnity and defined health insurance is often the talking point for health insurance seekers.
Indemnity-based and defined benefit plans:
Indemnity-based health insurance plans are those which offer coverage and eventual repayment of expenses incurred during hospitalisation as per the selected health insurance plan. Defined benefit plans offer a pre-defined lump sum payout for a particular disease, irrespective of any pre- or post hospitalisation expenses.
Common examples of indemnity based health insurance plans are Mediclaim policies or family floater plans while critical illness plans or disease specific plans are examples of defined benefit health insurance plans.
Comparing the two plans:
The money can be used towards pre- and post hospitalisation expenses. A diagnosis report signed by a medical specialist must be submitted for availing lump sum payout for such a plan.
On the downside, indemnity plans have a deductible clause which means that policyholder has to cover for some percentage of the hospitalisation expenses. Cost of post-operative care and medication is excluded in indemnity health plans.
Defined health benefit plans usually offer a cap on hospital cash cover. So, if a policyholder opts for a defined health benefit plan, the payout per day will be as per the stipulated limit irrespective of the amount spent by the policyholder during hospital stay.
Choosing between the two
Both the plans have their advantages and choosing between the two must be correlated as per the individual health needs of a policy seeker.
For example, if someone has a high risk of specific ailments that run in the family, a defined benefit plan may be the right choice along with an indemnity insurance plan to make for a comprehensive health cover.
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