Buy a fixed benefit health plan only as a supplement

It should be taken only to enhance a mediclaim policy since it covers incidental expenses as opposed to the hospitalisation and treatment expenses offered by the indemnity plan.

    The introduction of health insurance portability has done away with the dilemma of choosing an insurer. If the service is not up to the mark or the premium is too high, you can switch to another company. However, buyers are now faced with a new confusion. Should they go for an indemnity plan, which will reimburse their hospitalisation expenses, or should they buy a policy that pays a fixed sum irrespective of the expenses? 
    Experts say the dilemma is unwarranted because a mediclaim policy and a fixed benefit plan are completely different in terms of the coverage they offer. The indemnity or mediclaim policy covers the expenses incurred on hospitalisation and treatment, while a defined benefit plan is meant to cover incidental expenses and loss of income due to hospitalisation. "Both have their own uses and should complement each other," says Mahavir Chopra, head of online and retail initiatives, at Medimanage Insurance Broking. 
    In the past few months, several insurers have launched defined benefit plans. Unlike indemnity plans, these policies don't place limits on claims. In most indemnity plans, there are sub-limits on the amount that can be claimed under various heads. For instance, many plans cap the claim on daily room rent to 1% of the sum assured. Many are not paid in full because the sub-limit on a particular head has been exhausted. 
    "Our research shows that the key concerns among policyholders are getting the full claim amount, increase in premiums in case of a claim, and worries over coverage of all surgeries," says Rajeev Jamkhedkar, managing director and CEO of Aegon Religare Life Insurance. Last month, the company launched its iHealth fixed benefit plan, which gives a per day cash allowance in case of hospitalisation and makes a lump-sum payment in case of surgery. A premium of about 12,000 a year can get a family of four (husband 35, wife 30 and two children aged 5 and 3) a cover of 3,000 for every day of hospitalisation and 3 lakh in case of surgery. "The cover is not a floater to be shared by the entire family, but for each individual. This means the combined insurance cover works out to 12,000 a day and 12 lakh for surgeries," says Jamkhedkar. 
Insufficient coverage 
However, keep in mind that the policy will pay a lump sum only in case of surgery. Diagnostics, doctor's fee, room rent and medicines are not covered. Most cases of hospitalisation do not require surgery (see graphic). Many infections and common ailments, such as gastroenteritis, malaria, dengue and hepatitis, have to be treated medically. Most cases of injuries also don't need surgery. In such cases, the iHealth fixed benefit plan will pay only the daily cash component of 3,000-5,000 depending on the plan opted for. 
    Some fixed benefit plans, such as the Wellsurance plan from Tata AIG General Insurance, have a broader coverage. "Our policy offers comprehensive coverage for hospitalisation, which not only includes the room rent and ICU charges, but also nursing expenses, investigations like X-ray, MRI, CT scan and physiotherapy," says Gaurav Garg, managing director & CEO, Tata AIG General Insurance. For about 12,000, a family of four gets covered for 3 lakh against more than a dozen critical illnesses, as well as daily hospital cash, ICU charges and even 2,500 convalescence benefit for five days after discharge from the hospital. However, unlike the iHealth plan from Aegon Religare, surgeries are not covered unless they relate to the critical illnesses specified under the Wellassurance health plan. 
    This also means that a fixed benefit plan should not be seen as a replacement for a plain mediclaim policy, which should be the base of your health insurance coverage. "We strongly recommend that a person go for an indemnity plan as well as a defined benefit plan," says Antony Jacob, CEO of Apollo Munich Health Insurance. 
Who should buy? 
A fixed benefit plan suits people who want to enhance their existing health cover. Software professional Rajesh Prasad and his 
    lecturer wife, Anjali, (see picture) have medical covers from their employers and have also bought the LIC Jeevan Arogya fixed benefit health plan. "Often, policyholders are unable to claim medical expenses that are not related to hospitalisation. A fixed benefit plan comes in handy in such 
    cases," says Jacob of Apollo Munich. His company offers both indemnity covers as well as fixed benefit plans. 
    Fixed benefit plans are a must for people who can suffer loss of income due to hospitalisation. Most salaried people get paid medical leave, but if your company does not offer this benefit, a fixed benefit plan comes to the rescue. Self-employed professionals must also consider these plans. It is important to note that a policyholder can make a claim under a fixed benefit plan over and above his claim in an indemnity policy. This also means a deeper scrutiny of claims because the policyholder will actually benefit for every day he stays in the hospital. Experts warn against the temptation to defraud which can lead to rejection of claim by the insurance company.

Rajesh Prasad, 35 and Anjali, 33, Bangalore 
Bought a fixed benefit LIC Jeevan Arogya plan for the entire family because both already have covers from their employers.