Differecne Between Indemnity Based Health Cover and Defined Benefit Health Cover - Over the past few days, various cell-phone users have been overruned with telephone calls or SMSs, urging them to purchase a new '3in1' plan from LIC of India. The plan provide health, life on top of accident cover. LIC Jeevan Arogya, a defined benefit plan, is similar to scheme floated by private life insurers. These plans hand out a lump-sump total amount upon hospitalization of the individual person.At the present the important difficulty is: should one go for this defined benefit plan from life insurance companies? To come across an answer, you would have to 1st educate yourself about the two options available to you to finance your healthcare correlated expenses -- security based
health covers, typically offered by general insurers, and benefit policies like Jeevan Arogya, generally from life insurance companies. PROTECTION -
BASED HEALTH COVER The most standard variety of health insurance in the country are the indemnity policies, regularly referred to as mediclaim. The policies typically cover expenses healthcare allied to hospitalization.The claims are frequently settled by the insurer either on a cashless basis through association with hospitals or by reimbursing expenses after the bills are submitted.Only hospitalisation-related expenses are acceptable under such policies, which means a variety of expenses, like commuting to the hospital, fall outside the purview of such
health covers. CLEAR BENEFIT PLANSEarlier health insurance plans were the sole preserve of general insurance companies. Although several life insurance companies have also now in full swing offering health plans.A numerous of these policies is in the nature of benefit covers, where the benefit is pre-decided. To be precise the insurance company pays a precise sum assured to customers when they make a claim. "The key advantage of benefit policies is that policyholders do not need to worry about claim settlement as they know in advance the amount that would be disbursed. Moreover the documentation system is simpler," A new advantage is that you can make a claim even if you have in the past been reimbursed by an indemnity policy for the same treatment In a benefit policy, the sum insured for the possible occurrence is paid no matter what is spent. Although, in an indemnity policy, one is only reimbursed the actual cost. A further advantage of fixed benefit products is that in case of any possible event, Policyholder can claim both from an indemnity based cover and a fixed benefit cover.The benefit plans don't insist on the original discharge docs to settle the claim. In that sense, a benefit policy or plan can be used as a top-up cover to take care of recovery expenses or make good the loss of salary due to temporary break in employment. The important difference between these two
health covers is the term of policy. typically, indemnity plans have to be renewed annually where defined-benefit plans are renewable after three years or more, depending upon the cover.