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Benefit Plans under Health Insurance

What is a Fixed Benefit Health Insurance cover?

A fixed benefit plan is an insurance policy that pays a fixed (pre determined) amount (Sum Insured) on a specific covered event occurring. The policy pays out this fixed amount for the specific illness/condition irrespective of the expenses incurred by the insured during this event and there are no other conditions attached to this payout. This policy can be either as a stand alone Critical Illness cover, or Personal Accident Cover or a Hospital Cash policy.

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Ideally a Fixed Benefit Policy should be purchased by the insured in addition to the regular health insurance indemnity plan. There could be some expenses which are not payable under the regular health insurance plan that can be covered by the Fixed Benefit plan. With the rising cost of Healthcare (due to medical inflation) and many Lifestyle diseases affecting individuals, it is preferable for the insured to have Fixed Benefit plan in place to support the financial impact of an unforeseen medical emergency.

Why should one buy a Fixed Benefit Health Plan?

As mentioned earlier, an individual can opt for a specific coverage (Sum Insured) under the Fixed Benefit plan based on their existing coverage under a regular health insurance policy. This Fixed Benefit plan will be an additional cover to ensure that expenses not covered under the regular plan are taken care of. Expenses relating to pre and post hospitalisation and other day care expenses are normally not covered under a regular health insurance plan, but this policy will pay the Sum insured when the covered illness is contracted. This will act as a financial back up for the individual.

There are hardly any restrictions or pre conditions that govern the payout under this Fixed Benefit plan. Once the specific illness/defined condition occurring the policy pays out the Sum insured irrespective of the expenses actually incurred by the insured member. So in the case of a Critical Illness cover, on diagnosis of a covered Critical Illness, the policy will pay the insured the defined Sum Insured irrespective of whether the insured has availed any treatment, or surgery or the expenses incurred for treatment.

The payout will be released as a lumpsum payment by the insurance provider without considering the actual expenses incurred for the covered condition.

The documentation at the time of a claim under the Fixed Benefit Plan is very minimal given that the policy covers defined illnesses/conditions and the Sum insured is released on the occurrence/diagnosis of this condition/illness.

What are the limitations of the Fixed Benefit Plan?

The coverages under a Fixed Benefit Plan are normally restricted to a specific incident/illness/condition (Critical Illness or Hospital Cash) and hence can be restrictive when compared to a Regular health plan which has a wider coverage.

The coverage can sometimes be less than a regular plan. For example, if an insured has a Hospital Cash policy with a coverage of Rs 3,000 per day, and the insured is hospitalised for 5 days, this policy will pay Rs 15,000…Assuming that the insured incurs an expense of Rs 40,000, the remaining Rs 25,000 will not be payable…but in the case of a regular plan, the entire amount of Rs 40,000 will be paid under the hospitalisation expenses.

Once a claim is registered and settled under a Fixed Benefit plan, the plan will no longer be in force(it will expire)…this is different from a regular plan which will continue to remain in force even after a claim is settled and the policy can be renewed lifelong.

The cost of a Fixed Benefit plan is generally higher than a Regular Health insurance policy.
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