In today's world, healthcare costs can often lead to financial stress, especially in unforeseen situations. Fixed benefit health insurance can act as a vital cushion, offering financial security to policyholders when they need it most. Unlike traditional policies, a fixed benefit plan provides pre-determined lump-sum payouts for specific health-related events. Additionally, this type of health insurance can complement comprehensive coverage, making it a versatile choice for a variety of needs. This article explores the nature and advantages of fixed benefit health insurance, its working mechanism, and tips for selecting the best plan for your unique requirements.
What is fixed benefit health insurance?
Fixed benefit health insurance provides a lump-sum payout upon the diagnosis or occurrence of specific health events, such as a major illness, accident, or surgery. This type of insurance doesn’t depend on actual medical expenses but instead pays a pre-specified amount for each covered event. For instance, if a policyholder is diagnosed with a critical illness like cancer, they would receive the entire benefit amount regardless of the actual treatment costs. Fixed benefit plans help people manage unexpected costs more effectively by providing funds when they’re most needed.
Read more: What is health insurance?
Benefits of fixed benefit health insurance
Fixed benefit health insurance offers several distinct benefits that make it an attractive option for individuals seeking additional protection:
1. Financial flexibility:
The lump-sum pay out gives policyholders the freedom to use the funds as they see fit, whether it’s to cover treatment costs, settle household expenses, or offset lost income during recovery.
2. Easy to understand:
Fixed benefit health plans are straightforward, with clear, pre-defined pay outs for specific health events, which helps in minimising confusion during claims.
3. Suitable for all needs:
These policies can be tailored to suit a variety of needs, covering critical illnesses, accidents, or hospital cash benefits.
4. Complements comprehensive plans:
Fixed benefit insurance serves as an effective add-on to comprehensive health insurance, offering additional financial support beyond traditional coverage.
5. Quick claims process:
Since the payout is fixed and pre-determined, claims processing is typically faster and simpler, ensuring that funds are available promptly.
Also, check: Benefits of health insurance
How does fixed benefit health insurance work?
Fixed benefit health insurance operates by providing a pre-set amount for each covered condition or event. Here’s how it works:
1. Pre-determined pay out for specific conditions:
When purchasing the policy, each covered health event is assigned a fixed benefit amount, such as $5,000 for a heart attack or $2,500 for hospitalisation.
2. No impact of actual medical costs:
The payout is not influenced by the actual treatment costs. Whether the treatment expenses are higher or lower than the fixed amount, the policyholder receives the same amount.
3. One-time or multiple claims:
Depending on the policy terms, some fixed benefit plans may allow multiple claims for different events, whereas others may only allow a single claim for a specific health event.
4. Flexible usage:
The lump-sum payout is free from restrictions, giving the insured the freedom to decide how they will use the money, making it suitable even for indirect costs like rehabilitation, travel, or household expenses.
5. Complementary to traditional insurance:
The funds from fixed benefit insurance can complement a comprehensive policy by covering any additional or out-of-pocket costs that might arise.
