Every typical health insurance policy can be classified under two main types:
- Indemnity Health Insurance Policy
- Benefit Health Insurance Policy
The Indemnity policy is designed to offer you immense benefits. Under this policy, you have the freedom to choose and direct your own health care and visit almost any doctor or hospital as per your preference. The insurance company would then pay a set portion of your total charges. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. Also known as "fee-for-service" plans or 'Mediclaim' policy, it is designed to cover all the expenses related to hospitalization of an individual.
This type of insurance is the most commonly used set of policies as they provide the freedom for individuals to choose a hospital of their choice as opposed to a pre-determined list an insurance company requires you to pick from. It is important to note, however, that only expenses occurring out of hospitalization are covered by indemnity policies.For instance, expenses incurred for transport to the hospital or any other allied expenses do not fall under the purview of such policies.
If you have the option to choose an indemnity policy for health insurance, you may have a deductible. A deductible is the amount that you as a policyholder must pay each year toward your medical expenses before the insurance company begins to pay its share.
An add-on cover like the high deductible cover, would be ideal to choose, which may require you to pay a high premium now but would help reduce the financial burden on you at the time of claim.
Benefit Health Insurance Policies
Today, as our health needs have evolved, even the benefits offered in the health policies have also evolved. And if you are one of those who do not wish to take any chances with health conditions, opting for the benefit policy is the right thing to do. In the case of benefit policies, the insurance company pays a specific sum-assured when the claim is initiated. The advantage of health insurance benefit policy is that, as policyholders you need not worry about the claim settlement process as the sum-assured will be pre-determined and disbursed to you prior to the treatment. Even if you have made a claim using the indemnity policy for the same treatment, you could still make a claim with the benefit policy. Do note however, that there may be certain policies that require you to fulfill certain conditions before you are paid your claim.