Fixed benefit health plans v/s indemnity health insurance plans in India.


16 Jun 2023

Understanding the Differences between Two Primary Types of Health Insurance Policies in India

Medical emergencies, significantly when the cost of healthcare facilities is constantly rising, have made health insurance a mandatory asset in almost every individual's life. However, choosing the right kind of insurance often becomes difficult for an everyday person. This article will help you to understand and distinguish between the two primary forms of a health insurance policy.

What are indemnity health insurance plans?

An indemnity health insurance plan is a health insurance policy that allows you to reimburse the money with the original amount incurred as expenses while you are at the hospital. The money which is not used remains utilised for future claims till the end of the policy year. In the case of an indemnity health insurance plan, you will be reimbursed only upto the extent of your hospitalisation expenses or the sum insured of the plan, whichever is lower.

Thus, an indemnity health insurance plan is a regular type of comprehensive health insurance plan that we are familiar with, which pays for the expenses incurred due to hospitalisation. The claim for an indemnity health insurance plan can be either cashless or reimbursement.

What are its benefits and disadvantages?

Indemnity health insurance plan has the following advantages:

  1. This is usually an annual or a 2 or 3-year contract wherein a premium need to be paid for that tenure for the coverage to be provided.

  2. You have the flexibility as they opt for tie-ups with hospitals and other professional spaces for cashless claims. Alternatively, you can opt for reimbursement claims as well in non-network hospitals.

  3. Indemnity health insurance plans also usually pay for pre and post-hospitalisation expenses for a specified duration.

However, if a portion of the sum insured is not utilised in a given year, it does not get carried forward to the following year. In some plans, a deductible is attached, wherein you will have to pay a fixed amount on your own for each claim.

What are fixed-benefit health insurance plans?

A fixed benefit health insurance plan is a form of health insurance policy wherein the insurer pays a specified fixed amount of money when the insured event happens, irrespective of the actual amount spent on treatment. For example, the insured event can be a diagnosis of any of the listed critical illnesses in a critical illness plan.

What are its benefits and disadvantages?

The fixed benefit health insurance plans are designed in a manner where

  1. You may use it for a range of services like hospital cash policy, personal accident cover, and so on.

  2. You can use the money received from this plan for any purpose. There is no limitation on the usage.

  3. You do not need to have documents and papers but simply a diagnosis report from the doctor.

  4. It can be taken along with an indemnity health insurance plan to cover the costs which are not paid by the plan. It is a form of additional support for a pre-insured health issue.

The only concern in a fixed-benefit health insurance plan is that most plans come with a survival clause, i.e. in a critical illness plan, you need to survive for a minimum tenure of about 30 days in order to file a claim. If the insured person succumbs to death within 30 days, there is no payout in a fixed benefit health insurance plan.


So whenever you choose a health insurance policy for yourself, look into your specific requirements. It is necessary to have an indemnity health insurance plan so that the cost of your hospital gets covered. Again, if you are interested in extending your policy, you may go for fixed benefit health insurance plans as it covers the cost of pre-decided medical emergencies to the amount decided.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.