Hospital Indemnity

Hospital Indemnity Plans

Generally, there are two hospital indemnity plans. These are group hospital indemnity and individual hospital indemnity. The former is essentially a hospital indemnity plan taken out by an employer on behalf of the employees. However, cash benefits and other benefits are paid to the employee directly. Here, any member of the qualified group says, the staff of the company are deducted certain amounts towards the insurance cover. Consequently, when they are admitted into the hospital, they are entitled to the covers benefits.

On the other hand, Individual hospital indemnity plan is a plan subscribed to by an individual in their personal capacity. Unlike in a group plan, an individual can unilaterally terminate the hospital indemnity plan. Furthermore, an individual plan is customized to the holder’s preferences and wishes of coverage.

What is Hospital Indemnity

Hospital indemnity is a form of health insurance that pays a subscriber or the beneficiaries a certain amount of money when they or the members of their family are admitted in a hospital. Such amount is payable as long as the subscriber or the members covered are confined in a hospital. The amount may be paid daily, monthly or weekly.  

Recently hospital indemnity has been extended to not only have cash benefits but also cater for certain hospitalization expenses.  These include diagnostic procedures and transportation by ambulance. Noteworthy, hospital insurance indemnity is not an alternative to medical insurance because it does not cover for most hospitalization expenses.

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Hospital Indemnity

Coverage

Hospital indemnity has different coverage options available. Some will cover for long term stays such as in cancer and other chronic illnesses while others are short term. Short term hospital indemnity will cover for a specified time mentioned in the insurance contract. This time is usually a few days and in rare cases a few weeks. This coverage will be extended when the policyholders or members of their family are admitted.

Essentially, the coverage would extend to policyholders who are admitted to their homes. In addition, some hospital indemnity plans will also cover for hospitalization expenses. In determining the best coverage, regard must be had on the subscribers’ average expenses and their level of income.

Features of a Hospital Indemnity Policy

  • Pays out Cash benefits directly to the subscriber or their designee
  • Cash benefits are tax-free
  • Cash benefits are paid, daily, weekly or monthly.
  • Covers for policyholder and/members of their family admitted in hospital
  • Compatibility with medical insurance cover
  • Is a supplemental cover to medical insurance
  • Does not cover major hospitalization expenses
  • Coverage may be up to subscribers level of income or more
  • Covered benefits are predetermined
  • Available in silver, gold and platinum packages
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