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What are Indemnity and Fixed Benefit Health Plans?

By Finserv MARKETS - Apr 26,2019
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What are Indemnity and Fixed Benefit Health Plans?

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Given the diverse healthcare requirements of people, health or medical insurance plans are available in various forms. Hence, insurance providers offer multiple plans in their product line-up to ensure that people can satisfy all their health needs. Indemnity plans and fixed-benefit plans are some of the most common types of health insurance available in India. If you are confused between the two, this article will help you understand the difference between them in detail:

Indemnity Health Insurance Plans

An indemnity health insurance policy provides compensation to the policyholders based on the medical expenses incurred. For instance, if you have taken up a health policy for INR 5 lakhs and you suffer medical expenses worth INR 2.5 lakhs, the insurer will reimburse the actual medical expense i.e. INR 2.5 lakhs when you file a claim. Most of the health plans available in the market today are indemnity based plans. Here are some of the important benefits of indemnity health insurance plans:

  • Indemnity plans generally cover a wide range of illnesses and injuries along with the hospitalisation expenses incurred by the policyholder.
  • The insured can make multiple claims within a policy year provided the claim stays within the maximum sum assured limit.
  • Indemnity plans offer a cashless facility which makes bill settlement at hospitals
  • Plenty of flexible options are offered with indemnity health insurance plans such as voluntary deductibles and premium discounts.

Fixed Benefits Health Insurance Plans

A fixed benefit health insurance plan offers a fixed amount as compensation irrespective of the medical expenses incurred. Fixed benefits plans are generally limited to certain types of insurance such as personal accident covers, critical illness cover etc. On the occurrence of an illness that may give rise to a claim, the full sum insured amount is paid to the policyholder. For instance, a critical illness cover pays out the entire sum insured on the first diagnosis of cancer. Here are some of the key advantages of fixed benefit plans:-

  • Fixed benefit plans generally cover expenses that are typically not covered under a regular health insurance policy.
  • The lump sum benefit provided by fixed-benefit health insurance plans can be used for any purpose without any restriction.
  • A fixed benefit plan requires minimum documentation since the claim settlement is only provided on the occurrence of a disease. Hence maintaining diagnostic reports or medical bills is not required.
  • Some insurance providers offer fixed benefit plans as top-ups so that policyholders can avail of these benefits in addition to their regular health insurance policy.

While both indemnity and fixed-benefit health plans have their own advantages and disadvantages, either of them cannot be used as a substitute for the other. If you want to stay well protected against the medical expenses, having a combination of both is a good option. However, if you have to choose between the two, an indemnity plan offers better protection than a fixed benefit plan. We offer indemnity based plans along with health insurance top-up plans that provide fixed benefits. You can buy a Bajaj Allianz health insurance plan online at Finserv MARKETS to enjoy both benefits under the same policy.

Go through our beginner’s health insurance guide to get clarity on more such insurance concepts and terminologies.

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522