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Fixed Benefit Health Insurance

While buying a Health Insurance policy, the first thing one looks for is whether all their healthcare needs are covered or not. These days, many people ensure to have a thorough knowledge of the type of policy they buy to avail maximum benefit.

Before you choose to buy a Health Policy, it is important for you to understand the types of health insurance policies. There are two main types of health insurance policies that are Fixed Benefit policies & Indemnity plans. Fixed Benefit plans are the one wherein you get a fixed amount regardless of the claims you makse, and Indemnity plans are the ones wherein you get reimbursed for the money spent on medical treatment.

Continue reading to explore more about the Fixed Benefit Health Insurance and its working.

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What is Fixed Benefit Health Insurance? How Does it work?

Fixed benefit policy in health insurance is a type of health insurance wherein the sum insured paid to the policyholders is fixed. The specified amount is paid to the insured as a lump sum irrespective of the hospitalization cost subject to terms and conditions of the policy. Once the benefit is paid to the policyholder, the policy gets terminated.

The Fixed Benefit Health Insurance covers expenses only for a predetermined illness or a specific health condition that has been insured, and does not cover the regular hospitalization expenses incurred by the insured.

Let’s understand the working of Fixed Benefit Health Insurance in the below section: Mr. Vinod bought a Fixed benefit policy in health insurance policy of Rs. 20 Lakhs for Cancer. Now, Mr. Vinod is diagnosed with a Lung cancer during the policy period. In such a case, the insurance company will pay him a lump sum of Rs. 20 lakhs irrespective of the actual or estimated medical expenses. Once the insurer pays the fixed sum to Mr A, the policy gets terminated.

Importance of Fixed Benefit Health Insurance

Below mentioned are some of the benefits of Fixed benefit policy in health insurance plans. Have a look:

  • Enhances your standard plan:

    The Fixed Benefit Health Insurance plan adds a financial layer to the standard plan to cover medical expenses that are not covered by your standard health plan.

  • Get a Lump-sum payment:

    When you are diagnosed with a predefined disease or condition, your insurer pays you the whole amount insured in one single sum. As a result, you save a lot of time and have the surety that you have the money before starting therapy.

  • No stipulations to determines the payout:

    The claim payout under Fixed Benefit Health plans are not subject to any conditions or requirements.

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Advantages of Fixed Benefit Health Insurance Plans

  • Hassle Free Benefit payout

    With comparatively easier and simpler documentation, one can easily receive their benefit payout.

  • No Sub-limits

    These plans have no sub-limits to get coverage for the specific medical conditions.

  • Serves as a Financial Compensation

    The payout received from the Fixed Benefit plan may be used to compensate for lost wages or livelihood during treatment and recovery––helping to pay family expenditures, children's schooling, and nursing at home to some extent.

Disadvantages of Fixed Benefit Health Insurance Plans

  • Higher Premiums

    The premiums you pay for Fixed Benefit plans are comparatively higher than what you will pay for an indemnity plan.

  • Restricted Eligibility

    These plans have a restricted eligibility, often limited to specific ailments or illness

How are Fixed Benefit Plan Different from Indemnity Plan

To get a clear understanding of the difference between Fixed Benefit plan and Indemnity plan, take a look at the below table:

ParametersFixed Benefit PlanIndemnity Plan
DefinitionFixed Benefit Health Plan pays out the lump-sum amount for pre-determined medical problems or critical diseases.Indemnity based health plan offers comprehensive coverage against the expenses incurred during medical treatments, up to the sum insured
Claim Pay-outPays a lump-sum amount once the insured is diagnosed with certain diseaseReimburses the money spent on medical treatment up to the chosen sum insured
DocumentationDocumentation is very minimal in a fixed benefit planIndemnity plans require several documentation of all medical expenses
Policy TenureTerminates once the benefit is paidExpires when the claims made surpasses the chosen sum insured

Wrapping it up:

A Fixed benefit policy in health insurance only covers pre-defined or specific illness, therefore, you should choose a plan that covers some of the likely diseases to ensure maximum coverage. Thus, before buying any health care, evaluate your and your family’s healthcare needs, your family's medical history, pre-existing illnesses if any, policy limitations, sub-limits, etc and then decide a type of health plan.

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Naval Goel

Reviewed By : Naval Goel

Naval Goel is the CEO & founder of Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of Insurance Web Aggregator.