Page 150 - IC38 GENERAL INSURANCE

C. Hospitalization indemnity product

An indemnity based health insurance policy is the most common and highest
sold health insurance product in India. The Mediclaim policy introduced in the
eighties by the PSU insurers was the earliest standard health product and was
the only product available in the market for a long time. Though this product,
with a few changes, is marketed by different insurers under different brand
names, Mediclaim continues to be the largest selling health insurance in the
country.

Hospitalization indemnity products protect individuals from the expenditure
they may need to incur in the event of hospitalisation. In most of the cases,
they also cover a specific number of days before and after hospitalisation, but
exclude any expenses not involving hospitalisation.

Such a cover is provided on an ‗indemnity‘ basis, that is, by making good part
or all of the expenses incurred or amount spent during hospitalisation. This may
be contrasted with the insurance coverage on ‗benefit‘ basis, where the
amount that will be paid on the occurrence of a certain event (like
hospitalisation, diagnosis of critical illness or each day of admission) is as stated
in the insurance policy and is not related to the actual expenditure incurred.

Example

Raghu has a small family consisting of his wife and a 14 year old son. He has
taken a Mediclaim policy, covering each member of his family, from a health
insurance company, for an individual cover of Rs. 1 lakh each. Each of them
could get recovery of medical expenses up to Rs. 1 lakh in case of
hospitalisation.

Raghu was hospitalised due to heart attack and required surgery. The medical
bill raised was Rs. 1.25 lakhs. The insurance company paid Rs 1 lakh according
to the plan coverage and Raghu had to pay the remaining amount of Rs. 25,000
from his own pocket.

The main features of the indemnity based Mediclaim policy are detailed below,
though variations in limits of cover, additional exclusions or benefits or some
add-ons may apply to products marketed by each insurer. The student is
advised that the following is only a broad idea about the product and he should
acquaint himself with the product of the particular insurer he wishes to know
more about. He also needs to educate himself about some of the medical
terms that may be used.

1. Inpatient hospitalization expenses
An indemnity policy pays the insured the cost of hospitalization expenses
incurred on account of illness / accident.

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