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Are You Thinking to Purchase a Fixed-Benefit Health Insurance Plan? Go Ahead, It can be a Financial Back-up for You

Published On Sep 23, 2019 5:30 AM By Rupanjali Mitra Basu

A fixed-benefit health plan is a policy that will pay you with a fixed amount on making a claim. In this case, a particular health condition or an illness is insured, and the health insurance provider tends to provide a lump sum amount for the treatment of this pre-determined health condition. The primary feature of the fixed-benefit health plan is the guaranteed amount obtained by the policyholder, which is equivalent to the amount of sum assured. You have the complete authority to decide on the way for utilization of the sum assured obtained.

In the present times, the number of critical illnesses diagnosed among the masses, sudden and severe accidents on roads is on the increase. There can be a plethora of reasons responsible for this, including lifestyle factors and stress, environmental factors, genetics, and hereditary factors, rash driving, etc. Critical illnesses like cancer, organ transplant, kidney failure, heart stroke, paralysis, etc. can put you and your family into deep mental and financial distress.  The expenses in the treatment of these life-threatening illnesses will drain all your savings and will multiply your plight exponentially.

An arrangement by which you can be prepared to face any such distressful situation in life is by buying a fixed-benefit health plan. This plan will help you in combating the considerable amount of expenditure involved in the treatment of these illnesses. However, a fixed-benefit plan will not be helpful in coverage of the basic medical expenses like pre-hospitalization, post-hospitalization, domiciliary expenditure, etc.

For these, you will have to purchase an indemnity health insurance plan, and a fixed-benefit plan is a supplement to upgrade your health insurance cover. A number of indemnity health insurance plans like the Bajaj Allianz Health Guard Insurance plan, Religare Health Insurance-Care, etc. help in covering the basic medical expenses during emergencies.

Top #5 reasons to buy a Fixed-Benefit Health Insurance Plan

Let us have a look at the major reasons for purchasing a fixed-benefit plan.

1. Obtaining a lump sum amount

On the diagnosis or occurrence of the insured incident, you will receive a lump sum amount from the insurance provider for the treatment. This sum assured obtained is a great strength mentally and financially at the times of such distress.

2. Beneficial insurance option

A fixed-benefit insurance plan is a commercial and cost-effective insurance plan. They are priced reasonably and have fair premium rates. It is quite a beneficial investment option that ensures financial security.

3. No sub-limits

In indemnity health insurance, the insurance providers impose several constraints in the form of sub-limits such as sub-limits specified for certain diseases, capping of room rent, co-payment made mandatory in many cases, etc. 

However, in fixed-benefit health plans, there are no such sub-limits to restrict the benefits of being availed by you.

4. No restriction on the utilization of sum assured

In the case of a fixed-benefit health insurance plan, there is no restriction on the utilization of the sum assured obtained. You can use it for medical or even non-medical expenditure. The treatment procedure for critical illnesses are time taking, and you can also face a loss of income during that period.  You can use the lump-sum amount which has been obtained from the insurance provider for the fulfilment of other necessary expenses like travel, household expenditure, education, etc. 

5. Financial back-up

Diagnosis of a critical illness and the procedure for its treatment or a sudden accident are painful both physically and mentally.  In such a situation of mental turmoil, with a fixed-benefit plan, you will have financial support to rely on. You can at least sideline the financial worries and focus on the treatment and your recovery.

How does a Fixed-Benefit Health Insurance Plan work?

A fixed-benefit health insurance plan can act as an additive income. By the fixed-benefit health insurance plan, you will obtain a fixed amount on the occurrence of an incident that has been insured. This incident can be a critical illness or a sudden and severe accident. 

Suppose, you have purchased a fixed-benefit health insurance plan which provides a critical illness cover of Rs. 15 lakhs. According to the norms of the policy, during the tenure of the policy, you are unfortunately being diagnosed with a critical illness that is covered in your policy. Your insurance provider will provide you with the sum assured, i.e. Rs. 15 lakhs on the diagnosis. The lump-sum payout is not affected by the expenditure that has been incurred during the treatment. Even if the entire expense of the treatment has been Rs. 5 lakhs, you will obtain your Rs. 15 lakhs and then your policy will be terminated.  

Top #5 advantages of opting for a Fixed Benefit Health Insurance Plan

Some of the major advantages related to a fixed benefit health insurance plan can be mentioned below.

1. Compliments Indemnity Health Insurance Plan:

A fixed-benefit health insurance plan helps provide coverage for several services such as the critical illness cover, personal accident cover, etc. You can easily select a fixed-benefit plan in a way so that it can act as a cover-up plan for those expenses which your base health insurance policy is not providing coverage.

Basically, a Fixed Benefit Health Insurance Plan compliments your existing Indemnity health insurance plan. So, if there is an unprecedented illness or accident for which hospitalization might not be necessary, a fixed benefit health plan pays for the same irrespective of the amount spend in hospitalization.

2. Easy documentation:

Fixed-benefit health insurance plans will not need a huge amount of documentation to make a claim as required in case of a general health insurance policy. A diagnosis report or a report regarding the treatment is enough for making claims.

3. Easy renewal:

The fixed-benefit health insurance plan has provisions for hassle-free renewal. On the onset of the renewal date, you can easily pay your renewal premium and avail the benefits for another term of the policy.

4. Easy claim:

Moreover, in the case of fixed-benefit health insurance plans, there are not many conditions or specifications which hamper the pay-out.  So, if the expenses for medicines purchased are not covered under the general health insurance policy, it can be covered by the fixed-benefit health plan.

5. Tax benefits:

Under Section 80D of the Income Tax Act, 1961, the premium paid for the fixed-benefit health insurance plan can be used to claim Income Tax deductions.

You may also like to read Top 10 health insurance policies with tax benefits

Drawbacks of Fixed-Benefit Health Insurance Plan

By a fixed-benefit health insurance plan, a guaranteed and fixed amount will be received on the occurrence of the insured incident. Suppose, you have chosen hospital cash cover as your fixed-benefit health insurance plan and pre-defined a limit of Rs. 3,000 per day expenditure.  But, the total hospitalization was for 4 days, and the expenditure was Rs. 40,000. But, as per the provisions of the plan only Rs. 12,000 will be obtained by you. This has a negative impact on your budget as well.

4 Important points to consider about Fixed-Benefit Health Insurance Plan

There are some points which you should keep in mind while purchasing a fixed-benefit health insurance plan.

1. You should read carefully about the clause related to the ‘Survival Period’ of the policy. This clause states that you should remain alive for a specified period of time after you have been diagnosed with a critical illness. You are eligible to make a claim under a fixed-benefit health insurance policy only when you have survived the waiting period.

2. The major factors which you should consider while deciding on your fixed-benefit health insurance plan are the premium which you will be paying, the inclusions and exclusions, etc.

3. You should check the fine print of the policy document regarding the inclusion of the major critical illnesses which are covered under the plan.

4. According to the policy regulations, pre-existing diseases will be covered under the fixed-benefit health insurance policy after the specified waiting period.

Also Read

11 things to consider when comparing critical illness insurance plans

Top Health Insurance Companies in India and Their Benefits

Hence, it is considered to be an ideal case if you have an indemnity health insurance plan for coverage of basic hospitalization expenses and a fixed benefit health insurance plan to cover unexpected incidents like critical illness or accidents.

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