Indemnity health plan: A right cover to reimburs expenses incurred during hospitalisation

The need for health insurance is unquestionable in view of the rising incidences of health issues and spiralling medical inflation. But it is important to choose the right cover given that a consumer is spoilt for choices today.

Insurers say a base cover for any health insurance has to be the traditional indemnity health plan. It reimburses your expenses incurred during hospitalisation (as outlined in the policy). It can either be in the form of reimbursement once you submit the bills after being discharged from hospital, or a cashless facility in which the insurer releases the money as approved by the TPA(third party administrator) or the insurer.

For example, if you have incurred a cost of 1 lakh during hospitalisation and the sum insured of the policy is 5 lakh, the final claim settlement account will be up to 1 lakh.

Indemnity plans are categorised as individual health plan and family floater plan. A individual plan typically covers expenses incurred on room rent, surgeon's fees, doctor's fees, operation theatre charges, etc. This plan, as the name states, is limited to an individual.

The second variant is the family floater. It could cover 3-4 members of a family and the sum insured is applicable to each of the family members covered under the policy. If the size of the cover is 5 lakh, each covered member can claim the entire sum insured in the event of hospitalisation. Hence, it is better that family floater as an option should be exercised only if the possibility of hospitalisation is low.

Otherwise, the chances of exhausting the sum insured are very high. As a result, other family members will have less or no coverage for the rest of the year. Such policies are generally targeted at a family of two adults and two children. Couples with either no children or a single child can also opt for a floater.