Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care and health system expenses, among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement.
With a growing increase in lifestyle-related diseases, the risk of having hospitalization is increasing.To make matters more complicated, the cost of healthcare is rising even faster than the general level of inflation.
As a result, taking care of a medical emergency or being afflicted with a serious aliment can not only take a toll on one’s general well-being but also their financial stability. This is why it is important to not only have a health insurance plan but additional back-up as well, in this case, in the form of a fixed benefit plan.
It is important to remember that while a fixed benefit health insurance plan covers a specific insured event, it does not cover aspects like pre-hospitalization and post-hospitalization expenses, and day-care expenditures.
This is why you should always ensure that you have a basic indemnity policy in place, over and above which, you can opt for a fixed benefit plan. To put it simply, a fixed benefit plan is for those individuals who want to enhance their existing health cover.
How does a fixed benefit plan work?
A fixed benefit plan pays a certain stipulated sum on a pre-defined event that has been insured. In a sense, it works like an income supplement. It could be in the form of a hospital cash policy, personal accident cover or a standalone critical illness cover.
For example, a critical illness policy will pay the policyholder the sum assured if the individuals covered under the plan contract any of the critical illnesses listed in the plan. Thereafter, the plan will terminate. To ensure that the plan chosen covers a range of likely diseases, you should pick a plan that covers at least some of the commonly known critical illnesses. The payout from the insurance provider has no relation to the actual expenses incurred, in a fixed benefit plan.
Often, policyholders are not able to claim medical insurance and expenses that are not related to hospitalization, which is where a fixed benefit plan comes in handy. It also compensates individuals for income lost due to hospitalization. This is particularly beneficial for self-employed professionals or those who do not get this benefit from their employer.
Why you should have a regular health insurance plan
A regular health plan provides a wider coverage, as a fixed benefit plan only covers specific illnesses. Thus, if you are to be hospitalized for a minor surgery, or because of accidental injuries, your health insurance plan will come into play.
Also, when it comes to a fixed benefit plan, once the claim is paid, the plan ceases to exist. However in the case of a regular health insurance policy, you can claim the amount up to the sum insured within the policy year and also renew the policy for life if you like.
So for example, if the sum insured is INR 3,00,000 and the bill amount is INR 70,000, the balance INR 2,30,000 will remain unutilized but the policyholder will be able to use this amount to claim any other hospitalization costs that might crop up during the coverage period. Additionally, fixed benefit plans are more expensive than a regular indemnity-based policy.
Supplement your health insurance plan with a fixed benefit plan
Your health insurance plan, which can be in the form of a family floater or mediclaim policy, should thus be the main cornerstone of your health insurance investments. Over and above that, you can consider opting for additional security by purchasing a critical illness plan to protect yourself against lifestyle-based diseases and a hospital cash policy to meet incidental costs while you are hospitalized.
Key factors to keep in mind
Insufficient coverage—the policy will pay a lump sum only in case of surgery
The payout from the insurance provider has no relation to the actual expenses incurred
Some fixed benefit plans have a broad coverage, but not all
Ideal for people who want to enhance their existing health cover