Types of health insurance policies | Fusion - WeRIndia

Health insurance is essential to meet health emergencies. As healthcare is becoming expensive day by day, health insurance is mandatory to meet the expenses.

While some people have healthcare policies offered by their employers, they do not cover entire expenses. Hence, a comprehensive health policy is vital to cover the cost of healthcare.

Insurance companies offer mainly two types of health insurance policies – indemnity-based plans and defined benefit plans.

An indemnity-based health insurance plan reimburses the cost of medical expenses to the policyholder. Under this plan, the policyholder will have to incur medical expenses, which will be reimbursed by the insurance companies later.  Family floater plans, Mediclaim, individual and senior citizen health plans fall under indemnity health insurance plans.

As the indemnity-based health policies tie-up with hospitals, policyholders can easily visit a particular hospital for treatment. These health insurance policies cover the actual amount of the hospital amount. Yet, they do not cover many expenses like post-operative expenses and medicines. Besides, these plans generally have a deductible, i.e., policyholders have to meet a certain amount of expenses.

A defined benefit plan pays a specified amount on an insured event. Critical illness policy, hospital cash policy, and major surgical benefit policy are defined benefit plans. These plans cover post-hospitalization expenses and medicines. As the plan pays only a stipulated sum or a fixed pay-out, the policyholder has to pay the balance amount.

For instance, if a policyholder chooses hospital cash cover for a stipulated limit of ₹3,000 per day towards expenses, then the insurance company pays only that amount even though the expenses exceed the limit.

So, policyholders need to buy an indemnity-based plan first to meet the cost of hospitalization. They can choose a defined benefit plan and take them as supplement plans to cover post-hospitalization expenses.

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