Today, health and wellness have become buzzwords in India. Increased awareness of holistic health encourages people to pursue a healthier lifestyle. However, your defense against health conditions is deficient without a suitable health insurance plan. 

As skepticism around insurance primarily arises from misinformation, we bring you this guide on health insurance plans. We will cover fixed benefit health insurance and indemnity medical insurance and all their intricacies. 

So, let’s get started!

A fixed benefit health insurance plan pays a specific stipulated sum for a predefined event that is insured. The plan extends a guaranteed and fixed amount to its insurer if he/she experiences an insured event as laid by the policy terms. 

Here, the insured event can be medical conditions or critical illnesses, such as cardiovascular diseases, kidney functioning issues, and cancer, among others. 

Moreover, a fixed benefit health insurance plan extends a lump sum amount to the insured as a claim, regardless of the actual or intended expenses that he/she incurred during hospitalisation. Therefore, the utilisation of the claim amount is completely the prerogative of the policyholder.

Medical emergencies elongate one’s duration of hospitalisation as well as necessitate a greater amount of funds. This is especially the case for someone diagnosed with life-threatening diseases,  which are on the rise lately.

India has undergone a surge in cases of critical illnesses over the years. Additionally, a 2020 report by the Indian Council of Medical Research (ICMR) suggests that fatalities due to critical illnesses will only increase in the near future. Therefore, it is high time that we take due measures to safeguard your loved ones against such ailments.

Moreover, this is where fixed benefit health plans can be especially resourceful.

In the case of a critical illness policy, this health insurance plan will pay its policyholder the amount assured if the insured individuals contract any of the enlisted critical illnesses under the plan. Allow us to elaborate on this by way of an example:

Let’s say Ms. Verma signed up for a critical illness health insurance plan with an insured sum of Rs.10 lakhs. Within the policy terms, she was diagnosed with one of the critical ailments enlisted under the plan. Therefore, she will receive a lump sum of Rs.10 lakhs as a claim payout irrespective of the expenses she will incur. As she receives the total sum insured under the plan, the policy is terminated.

Furthermore, when opting for a fixed benefit health insurance plan, you should ensure that your plan effectively covers a range of likely diseases. Therefore, we suggest that you pick a plan, which covers at least some of the most common critical illnesses. 

Additionally, the skyrocketing cost of medical care calls for one to be backed by a well-planned financial arrangement. Here, you can think about a fixed-benefit plan as an enhancement to your existing health cover. 

It also caters to non-medical expenses that may arise due to loss of livelihood or a shortfall in earnings during hospitalisation and recovery time. Further, this plan is particularly beneficial for you if you are prone to certain medical conditions due to genetics or lifestyle, etc.

As the name suggests, an indemnity medical insurance plan indemnifies its policyholder against hospitalisation expenses. This plan reimburses the actual expenses incurred by the insured during hospitalisation. However, the plan reimburses these expenses only up to the total sum insured under it. A good example of this plan is Mediclaim, which is a popular insurance product.

These plans come with an array of policies, such as Critical Illness Policy, Daily Hospital Cash Policy, and Personal Accident Policy. As a result, they cater to a variety of medical needs.

Moreover, if an insured opts for a cashless hospitalisation plan, he/she requires paying only a certain fixed amount, and the insurer takes care of the rest. However, if this individual does not have a cashless hospitalisation plan, he would need to submit all receipts and bills to the insurer. Based on these documents, the insurance provider will reimburse the insured person.

Insurers of these health plans usually have tie-ups with a number of medical centres and partner hospitals. As a result, indemnity-based health insurance plans offer a high degree of flexibility when it comes to hospitalisation. Therefore, policyholders can conveniently choose to visit a specific medical centre or hospital without fretting about the cost of the care provided. 

Additionally, these plans cover a broad range of illnesses and treatments alongside covering the actual cost of hospitalisation. The example below effectively sums up the benefits of a hospital indemnity insurance coverage:

Let’s say Mr. Sharma signs up for an indemnity-based health plan with an insured amount of Rs.10 lakhs. Within the policy terms, he gets hospitalised and is faced with a bill of Rs.3.5 lakhs. Here, Mr. Sharma will submit all hospital bills detailing the expenses incurred during his stay at the hospital. Upon assessing these documents, his indemnity medical insurance company will pay out Rs.3.5 lakhs.

Both of these health plans are extremely distinctive and serve varied medical needs. Moreover, as observed in the table above, each of these plans has its benefits and drawbacks. 

Another aspect of evaluating these two plans can be their respective tax benefits. However, tax benefits for both these plans are the same. Therefore, regardless of your choice, you can avail of tax deduction as per Section 80D of the Income Tax Act, 1961. Here, a premium up to Rs.50,000 for senior citizens and up to Rs.25,000 in case of non-senior citizens is eligible for a tax deduction.

So, which one should you opt for? We believe that this decision boils down to your needs and requirements. With a fixed indemnity medical insurance plan, you can achieve financial preparedness and higher protection for yourself and your family. 

Moreover, given that we live stressful lives today that make us vulnerable to critical illnesses, it would make sense to supplement your existing health policy with a fixed benefit health plan.

Parting thoughts

Taking care of your health and that of your family is a matter of greatest importance. However, it is common knowledge that medical care is currently expensive. Therefore, insurance plans offer you a way to evade hefty medical bills that can derail your finances. And, we hope this guide provided you enough insight on the same and eliminated your hesitance to buy a health plan.