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Is an Indemnity Health Insurance Plan Ideal for You?

By Juhi Walia
01 September 2022, 11:09 AM

Health insurance is the answer if you want good-quality medical treatment without upsetting your finances and savings. With the increasing costs of medical care, insurers have many policies to meet your needs and budgets. If a basic policy is insufficient to meet the expenses, you can always rely on health insurance riders to come to your rescue. Among the host of policies, there’s the indemnity plan you can consider when you buy health insurance. Read on to know what it entails to make an informed decision whether it suits you. 

What is a Hospital Indemnity Plan?

Essentially, there are two types of health insurance plans — fixed benefits and indemnity. Medical insurance plans where the company pays for the hospitalisation expenses you incur up to the sum insured are called indemnity-based health insurance plans. In other words, the health insurance provider will pay the medical costs within the coverage limit of the sum you have insured. In the case of cashless hospitalisation, you will need to pay a set deductible amount, and the company will settle the rest with the hospital. 

If you have a reimbursement-based plan, you must submit valid medical reports, medical bills, and other documents. The insurer will reimburse you for all these expenses. An indemnity plan can be any of the types of health insurance, whether an individual policy, family floater health insurance, senior citizens health insurance plan or even the COVID-19 plan. So, if the policyholder has insured INR 8 lakh and the medical bill comes up to INR 3 lakh, the provider will pay the latter amount, and the rest of INR 5 lakh will be for other hospitalisation during the policy year.

Indemnity-based Health Insurance Plans Benefits

Even if the insurer pays only the expenses incurred during hospitalisation, an indemnity-based health insurance plan has many benefits. These are: 

1. Flexibility to Opt for a Hospital

Health insurance providers are tied up with an extensive network of hospitals and doctors. So, the policyholder can opt for a hospital or medical practitioner for their treatment. Since a cashless facility is usually available, it takes away the hassle of submitting bills, as the hospital takes care of it.

2. Vast Range of Protective Cover

An obvious benefit of indemnity-based plans is the coverage for the very many diseases and treatments. If the insured has taken an adequate coverage amount, the indemnity-based policy ensures that they needn’t stress the hospital bill amount. 

3. Reasonable Premiums

People consider health insurance an expensive deal, primarily because of the premium amount. Indemnity plans include a deductible where the insurer and the insured share a portion of the treatment cost, reducing the provider’s risk. Since most plans have co-payment options and sub-limits, the premium will be lower if the co-payment component is higher. 

4. COVID Treatment in New Indemnity Plans 

A standard indemnity-based health insurance plan, insurers offer Corona Kavach Health Insurance to provide coverage against COVID-19-related hospitalisation. The coverage and terms and conditions are more or less the same with all the insurers. A policyholder can choose a sum insured of INR 50,000 to INR 5 lakh for individual and family members, with the entry age of a minimum of 1 day and a maximum of 65 years. The policy term can be 3.5 months, 6.5 months or 9.5 months. Many people have required medical care because of the pandemic, so they opt for this plan. Below are the kinds of expenses the insurer covers, subject to the specified limits in each category:

  • Pre, during and post hospitalisation expenses, including blood test, treatment, PPE kit, ICU charges, oxygen cylinder and doctor’s consultation fees at the time of hospitalisation
  • Road ambulance cover
  • Treatment for co-morbidities 
  • Home care treatment 
  • AYUSH treatment

Domiciliary Treatment

Suppose a patient does not find a hospital bed when diagnosed with COVID or is too critical to be taken to a medical institution. In that case, the indemnity health insurance plan will cover home or domiciliary treatment.  

Where the Indemnity Plan Falls Short

Even though indemnity-based health insurance plans provide respite in terms of hospitalisation costs, they do not cover several expenses, for instance, post-operative care and medicines. The policyholder has to foot some of the expenses. 


When you buy health insurance, include an indemnity-based plan that will cover hospitalisation costs to get maximum financial protection. To extend the insurance coverage, one can choose a fixed-benefit plan that will reimburse the insured for pre-decided ailments or accidents up to the sum insured. These have affordable premiums, offer the flexibility to choose a hospital, a vast range of coverage and more. As with any health insurance policy, you must research the terms and conditions as these would differ from company to company and plan to plan. 

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1. How is an indemnity plan different from fixed benefit plans?

In a fixed benefit health plan, the insurance company pays a fixed amount of the sum insured to cover medical expenses for a condition for which the insured has bought the policy. You can use this type of plan as an add-on for a supplemental source of finance when one has a pre-insured health incident. It covers expenses for an array of services — hospital cash, critical illness or personal accident. A policyholder can choose the provisions of the fixed benefit health plan based on their existing health insurance plan. Thus, the fixed benefit health plan works as a supplement to cover any expenses that other regular health insurance plans do not.

2. How can I determine whether a fixed benefit plan is ideal for me or an indemnity?

Whichever health insurance plan you may choose, the main thing to consider will always be your medical needs. If you are at a high risk of a hereditary illness or require a lump sum amount for medical treatment, a fixed benefit plan will be better for you. 

3. What factors are the premium amounts in indemnity plans based on?

The premium amount will differ based on age and location. 

4. Does an indemnity health insurance plan require a minimum period of hospitalisation to be eligible for a claim?

Yes, the policyholder will need a hospitalisation of at least 24 hours to be eligible for the claim. 

5. Is there a waiting period for COVID coverage?

A new indemnity plan has a waiting period of 15 days. However, you can raise a claim for treatment without waiting if you already have a policy. 

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