Nowadays, health insurance is no longer a luxury but a necessity. With rising medical costs and the increasing frequency of lifestyle diseases, having the right health insurance policy can be a lifesaver.

An indemnity health insurance plan is one of the most common types of health insurance policies. Understanding how it works can help you choose the right coverage, features and, ultimately, the best policy for your needs.

Let’s explore this in detail and see why it is essential to have such a policy!

What is Indemnity in Health Insurance Policies?

Policies that reimburse you only for the actual medical expenses of your treatment are called Indemnity Health Insurance Policies. Most health insurance policies available in the market are of this type.

The insurer reimburses the policyholder for their actual expenses and indemnifies the policyholder for their costs.

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Such health insurance policies have several clauses, such as deductibles, co-payments, sub-limits, exclusions, etc.

As a rule of thumb, keep this in mind:

The top indemnity health insurance policies should not have –

These are the main criteria for a good policy. Apart from this, it should

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What are the best health insurance plans with indemnity available in 2024?

  • Aditya Birla Activ One:  This policy has seven different variants – all of which have no co-payment, no disease-wise sub-limits, and no room rent restriction. However, we recommend going for at least the VIP+ variant because it has a lower pre-existing disease waiting period of 3 years and a no-claim bonus. For comparison, the NXT variant has a 4 year PED waiting period and no no-claim bonus. As an insurer, Aditya Birla is a reasonably new entrant into the market, with a claim settlement ratio of ~ 93% (average of the last 3 years) and 11 thousand + network hospitals.
  • Bajaj Allianz Health Guard Platinum: Bajaj Allianz Health Guard Platinum is one of the more comprehensive policies offered. It has no co-payment and disease-wise sub-limits but a room rent restriction of a single private room. It covers daycare treatments but does not cover home care and domiciliary treatments. This policy has a 50% no-claim bonus per year up to 150% and 100% restoration for a different illness after complete exhaustion of the base cover.

However, this policy costs a little more than usual, and the waiting period for maternity is 6 years. As an insurer, Bajaj Allianz has a claim settlement ratio of ~ 94%, with over 8 thousand network hospitals.

  • Care Supreme: Care Supreme is a comprehensive and economic policy. One of the top features of this policy is that it has no loading charges, apart from the usual no room rent restrictions, co-payment and disease-wise sub-limits. The cover amount ranges from ₹ 5 lakh to ₹ 1 crore. This policy also has a unique feature called Super NCB, where your no-claim bonus will increase by 100% every year up to 500% of the sum insured, irrespective of the claim status. As an insurer, Care has a claim settlement ratio of  ~ 90%, with 9.4k + network hospitals.
  • HDFC ERGO Optima Secure: This is one of the top-notch policies by one of the top insurers in India. As an insurer, HDFC ERGO has a claim settlement ratio of 97.5% and an ICR of 81.9%, one of the highest in the industry. The policy has no room rent restrictions, disease-wise sub-limits, and co-payment. This policy also offers a 100% restoration benefit that you can use for any illness. Plus, you can get a no-claim bonus of 50% up to 100% of the sum insured, even if you make a claim. All in all, this is an excellent policy.
  • Niva Bupa ReAssure 2.0: ReAssure 2.0 is usually recommended for people with benign PEDs such as BP, Hypothyroidism, etc. In line with the country's top policies, this policy has no room rent restrictions, disease-wise sub-limits, or co-payment.

This policy also has a restoration benefit and no-claim bonus, unlike any other policy in the market. Once the restoration is triggered, it will stay active until you stop renewing the policy. This is called ReAssure Forever, which can be used for any illness in a policy year.

The no-claim bonus is also quite different in this policy — the amount not used in the previous year will be carried over to the next year up to a limit (as per the policy variant).

Why should you avail policies that have indemnity?

Insurance is a tool for risk management. By purchasing a health insurance policy, you transfer the risk from yourself to the insurer. This will give the policyholder peace of mind, knowing that their medical expenses are covered in case of an unfortunate hospitalisation.

However, it is essential to understand that insurance companies will not cover everything. Not all risks are insurable, and not all losses are covered. Insurance companies carefully assess risks and set limits, which are mentioned in the policy wording and other documentation the insurer provides. Sometimes, these can be intimidating to go through — feel free to check out our Understand Your Policy page for a more simplified walkthrough.

What are non-indemnity plans?

Some plans are different from indemnity health insurance policies. Every insurer has a list of critical illnesses that they cover. If you’re diagnosed with any disease on this list, you can contact your insurer, who will assess the claim.

If it is legitimate, they will process the claim. You don’t need to show your medical bills and expenses. The very fact that you got diagnosed with the disease will entitle you to the payout.

These are called non-indemnity health insurance policies (or) critical illness policies.

You can use this payout for anything you want—medical bills, daily expenses, investing in your family’s future, etc. It can be from the base sum insured or sometimes an additional amount. This is the only situation in which you are not providing a bill to your insurance company.

But it’s not always that straightforward. Sometimes, you may have to go through a survival period to get this claim. The survival period is a specific period during which the policyholder must survive to be eligible for the insurance payout. This period varies from policy to policy, and you need to check the documentation for the exact duration.

Non-indemnity plans are available as add-ons to existing health policies or standalone ones. However, their most popular form is as add-ons to term policies because it is more affordable — you get much higher coverage with a relatively low premium.

However, if you’re purchasing a health policy and are concerned about a critical illness you might get, you can feel free to check out these critical illness policies:

  • Niva Bupa CritiCare
  • HDFC ERGO Critical Illness Platinum
  • Care Critical MediClaim
  • Aditya Birla Activ Secure

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Conclusion

Medical inflation is more than 2x the CPI inflation in India at 14%, and chances are that it may only increase in the future. Due to this, having an insurance policy is a necessity these days. There are numerous good health insurance policies in India, but no one-size-fits-all policy exists.

The best policy for you depends on your specific needs and budget. It’s always a good idea to go with a top insurer that offers such a policy.