Fixed Benefit vs Indemnity-based Health Insurance

A study in the medical journal “Lancet” found that private health expenditure in India is close to 78%, compared to 31% in Thailand and 61% in China. And in a country like India, where many people pay for their hospital expenses out of pocket, the steep rise in healthcare costs will undoubtedly deplete one’s savings.

Even while Insurance experts advise purchasing a Health Insurance Plan before starting to save for future goals, simply doing so may not be sufficient. Buying a Health Insurance Plan that appropriately addresses your unique medical needs and requirements is crucial.

In such cases, Fixed Benefit and Indemnity-based Health Plans are helpful for people who want to receive significant benefits without constantly paying a high premium.

What is a fixed Benefit Health Insurance Plan?

A Fixed Benefit Health Insurance Policy pays a certain amount to the insured person if a pre-defined illness or disease occurs. If the insured person contracts any disease or condition as listed in the policy, the insurer will provide a guaranteed and fixed amount to the insured.

Here, diseases or serious illnesses include Cancer, Kidney problems and Cardiovascular Diseases.

The Star Critical Illness Multi pay Insurance Policy  is a fixed benefit Health Insurance Policy. 

Furthermore, regardless of the treatment costs an insured person may incur, a fixed- benefit Health Insurance provides a fixed lump sum amount. As a result, the policyholder has complete discretion over how to use the claim amount.

What is Indemnity-based Health Insurance?

An Indemnity-based Health Insurance Plan protects its policyholder from unexpected healthcare expenses. This plan covers the insured person’s hospitalisation expenses. 

The plan, however, will only cover the costs up to the limits of the Sum Insured. There are many Indemnity-based Health Insurance Plans, including Star Comprehensive Insurance Policy, Family Health Optima Insurance Plan etc.

Additionally, if an insured chooses cashless hospitalisation in Network Hospitals, the insurer will directly pay the hospital for the expenses. But if the insured does not receive cashless approval, they have to submit all their hospitalisation Original records like discharge summary, lab reports, final bill, receipts,  prescription and medicine bills  to the Insurance Company, based on the policy terms the Insurance Company will reimburse the Insured person/ proposer.

Fixed Benefit vs Indemnity-based Health Insurance

Features	Fixed Benefit Health Insurance	Indemnity-based Health Insurance
Function	Provides a lump sum amount in case of specified critical illnesses or medical conditions. E.g.: Star Critical Illness Multipay Insurance Policy	Provide cashless hospitalisation or reimbursement for medical treatment up to the Sum Insured. E.g.: Star Comprehensive Insurance Policy
Basic prerequisites	According to the policy terms, a policyholder must be diagnosed with a specific medical condition or disease, as mentioned in the policy document. To get the insured amount, one must submit a diagnosis report verified by a medical doctor.	According to the terms of the policy, a policyholder must submit all hospital bills that provide a breakdown of all costs to the Insurance Company. Indemnity-based Health Insurance pays the insured person if they require in-patient hospitalisation or are undergoing medical treatment (including DayCare surgery or diagnostic testing).
Highlights	Increases cash flow by providing a lump sum payment. Because of the high cost of treating critical illnesses, this payment can be beneficial.	Provides comprehensive coverage for a variety of diseases and medical treatments. Insured persons may file several claims during any calendar year up to the limits of the Sum Insured.
Limitations	These plans are restricted to certain diseases or conditions. Additionally, these plans have premiums that are typically more expensive than Indemnity-based Health Plans.	Most of these plans have specific exclusions that they will not cover, such as gauze, gloves, oxygen masks, etc. Therefore, in the event of hospitalisation, the policyholder is responsible for paying for these items.

Conclusion

The primary reason you get Health Insurance is to protect your family from the financial strain of unexpected medical expenses. Your objective should be to minimise the financial burden while protecting your family with a robust Health Insurance Policy.

Depending on you and your family’s needs, you can choose either a Fixed Benefit Health Insurance Policy or an Indemnity-based Health Insurance Plan or both. You can browse through our list of Health Insurance Policies and choose the best one for you.