What Are Indemnity Health Plans?
For those leading a sedentary lifestyle, it is necessary to buy a health insurance policy while you are still young and healthy. You never know when you would need to make a few trips to the emergency room and that is when a health cover would help you. Many of us consider medical insurance as an added expense but, in fact, it forms a big part of your financial planning and saves you from diluting your investment during emergencies.
An indemnity health plan is one of the many types of health insurance plans available in the market. Alternatively called ‘fee-for-service’ plans, it is important to know what they offer. Indemnity health plans are a traditional form of insurance wherein you are indemnified against the medical costs incurred. These indemnity policies are bundled with terms in the fine print which you must be aware of. Let us understand this with an example.
Mr. A has an indemnity family health insurance. The sum assured is Rs15 lakh. One of his family members covered under THIS mediclaim policy needed treatment and the hospitalization expenses added up to Rs7 lakh. This amount will be reimbursed (subject to the terms and conditions) and Mr. A can use the balance sum of Rs8 lakh at another time. A word of caution, the fees for various professionals vary and their reimbursement may not be always in full in such an indemnity policy.
Expenses incurred during medical emergencies and treatments are reimbursed depending on the limits specified in the terms of your policy. There is freedom to select specialists and access to various treatment facilities is not restricted under this health insurance. However, an indemnity policy may have either a deductible or co-payment clause attached to it. A deductible clause attached to a policy is where the insured pays a pre-decided amount at the time of a claim. Under the co-payment clause, the insurer pays a certain percentage of hospitalization expenses. Both deductible and co-pay are decided at the time of buying the policy.
If you are someone who is comfortable with a particular medical practitioner or facility, an indemnity plan may suit you best. There is a great degree of freedom when it comes to the selection of services and doctors to avail treatment. Some plans even offer tax benefits under Section 80D of the Income Tax Act, 1961. You may look out for them while purchasing such a policy.
The bottom line in buying a mediclaim policy for your family is to protect them and you in times of need. Select a policy that suits your needs best; any additional benefits such as a wider coverage for illnesses or highest insurance cover or even tax planning are a plus. Who doesn’t want to get compensated for their hospitalization expenses in times of emergencies? So choose your health insurance plan wisely!