As mentioned above, under these kinds of plans you will get a reimbursement for the cost of hospitalization or medical treatment up to the sum insured.
So, let’s look at an example. Say you have an indemnity-based health insurance policy with a sum insured of ₹5 lakhs, and you undergo treatment in a hospital that costs ₹2 lakh. In this case your insurer will compensate you for these expenses. You just have to submit the relevant bills and medical documents. The remaining ₹3 lakh can be used for further medical expenses during the policy term.
However, note that this reimbursement will not cover any deductibles or co-payments included in the policy. For example, if you have a 15% copay, your insurer will pay 85% of the claim amount, while you bear the rest. On the other hand, if you have a deductible of ₹20,000, your insurance company will reimburse ₹1.8 lakh, while you pay out the rest.