What is a benefit-based health plan and is it right for you?

Health insurance, often referred to as mediclaim in India, covers expenses related to hospitalisation. They are a form of indemnity policies whereby claims are settled through tie-ups with hospitals or by submitting hospitalisation bills to the insurer for reimbursement.
Benefit-based health plans on the other hand, pay a fixed amount upon the diagnosis of a critical illness. The amount can act as a substitute for income when you are unable to work. These types of plans elevate the financial burden of the family by providing additional funds for medical expenses and treatment.
Take for example Amar, a man that have planned meticulously for his family’s financial needs. In his portfolio, he has a health insurance policy to protect himself and his family against unexpected medical emergencies. Unfortunately, Amar suffered a heart attack and had to undergo a heart by-pass surgery. Thanks to the health insurance plan he bought, Amar’s medical expenses like doctor’s fees, room charges, diagnostics and medicine are covered. However, his health plan wasn’t able to cover losses from missed business opportunities, costs of his family travelling to be with him and costs incurred during his recovery from the heart surgery.
Amar’s case is not uncommon. In India, conventional mediclaim and health plans only covers 14% of all expenses due to major illnesses. This means that, the remaining costs that an individual need to bear can still be quite hefty.
This simple illustration demonstrates how both the benefit-based policies and indemnity plans work hand in hand to provide a more comprehensive health coverage. So, when considering your health coverage needs, do look at how a benefit-based policy can help you to safeguard financial uncertainties as well.


By Tarun Chugh, MD & CEO, PNB MetLife.