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What is Indemnity Health Insurance?

Published On Jan 23, 2023

A health insurance policy has become a necessity for each family. It is a financial asset that will safeguard your family against any medical emergency that may arise in the future. There are numerous health insurance companies in India that provide various types of health insurance. One such example is indemnity health insurance. Under these plans, individuals get extensive coverage without paying high premiums regularly. Read on to know more about indemnity health insurance. 

What is Indemnity Health Insurance?

What is Indemnity Health Insurance? 

Indemnity health insurance is a type of plan in which an insurance company reimburses actual medical costs arising from hospitalization. Based on the terms and conditions, policyholders are eligible to make claims up to the sum assured limit. You can buy indemnity health insurance as an individual or family floater health plan. For instance, if any person undergoes planned surgery worth Rs. 3 lahks in the hospital. He is covered by an indemnity-based health insurance policy with a coverage limit of Rs. 5 lakhs. As a result, the insurance company will cover the total hospitalization expenses.

Benefits of Purchasing Indemnity Health Insurance

Listed below are the main benefits of purchasing indemnity health insurance

  • Flexibility to Choose Hospitals: 

The insurance companies providing indemnity health insurance plans have a huge network of hospitals. It is an important factor that you need to consider while purchasing a health insurance policy. Through this feature, you can choose any hospital of your choice and get premium-quality medical treatment without paying hefty medical bills. 

  • Wide Coverage: 

This type of health plan functions on the indemnity principle. This means the insurance company will provide coverage for hospital expenses up to the sum assured. Furthermore, coverage for pre- and post-hospitalization expenses, ICU, room rent, surgery, diagnostic tests, daycare treatment, and more. The policyholders can also claim their insurance policy for COVID-19 treatment. Terms and conditions may apply. 

  • Affordable Plans: 

Unlike fixed health insurance plans, where a premium is generally expensive, most indemnity health plans provide deductibles. It is the amount that the policyholders are willing to pay from their own pockets while claiming their health insurance policy. As a result, you may have to pay a low premium on their health insurance. 

How Does Indemnity Health Insurance Work? 

When you are hospitalized and choose to use your indemnity health plan, the insurance company pays the total medical bill, excluding deductibles. For example, if you file a cashless or reimbursement claim for Rs. 2.5 lakhs against a policy with a sum insured of Rs. 5 lakhs, the insurance company pays Rs. 2 lakhs after deducting the Rs. 50,000 deductible.

In India, the majority of health insurance plans are indemnity-based and can either be bought on an individual or family-floater basis. 

Inclusions and Exclusions of Indemnity Health Insurance

The expenses that are included and not included by an insurance company under indemnity health insurance are listed below. 

  • Inclusions: 

  1. In-patient hospitalization
  2. ICU treatment 
  3. Daycare treatment
  4. Pre and post hospitalization
  5. Medicine expenses and diagnostic test bills 
  • Exclusions: 

  1. Consumables such as PPE kit 
  2. Pre-existing diseases
  3. Pregnancy
  4. Cosmetic and dental surgeries
  5. HIV and congenital diseases
  6. War injuries and intentional injuries


An indemnity health insurance policy is an excellent choice if you are looking for a health plan that provides wide coverage against most disorders and maximum medical coverage. You can buy this plan either as a family floater health plan or as individual health insurance. Moreover, you can enhance your plan's benefits by purchasing a critical illness rider along with your standard base plan.

Also read: How Much Health Insurance Cover Do You Need?


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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