Fixed benefit or indemnity health plan, which one to choose for covering COVID?

Health Insurance

The number of Coronavirus cases is increasing with no relief in sight as India is expected to record the highest number of cases in the world. Since a vaccine is still in its development stage, people are looking at health insurance plans to solve their immediate financial needs if they test positive for Coronavirus and require hospitalisation. Health insurance plans have, therefore, become important in these testing times.

Normal health insurance plans allow coverage for COVID related hospitalisation and treatment. However, the cost of consumables like gloves, sanitizers, face masks, etc., is not covered under a normal policy. Since these costs are considerable, considerable out-of-pocket expenses would be incurred even after having a health insurance policy. Moreover, home treatments for COVID might not be covered under health insurance plans. Keeping these factors in mind and the need of a health cover for COVID, two new plans were launched – Corona Kavach and Corona Rakshak. 

Both these policies cover COVID related claims. However, while the former is an indemnity policy, the latter is a fixed benefit plan. This causes confusion for individuals as to which plan they should choose: indemnity or fixed benefit? 

Indemnity health plans are those which cover the actual medical costs incurred while fixed benefit plans pay a lump sum benefit in case of claims. So, while under Corona Kavach your hospitalisation bills would be covered, Corona Rakshak would pay a lump sum benefit if you suffer from Coronavirus and are hospitalised for three continuous days. So which to choose?

Let’s analyse the options in different situations –

  • When you already have a health plan

    When you have an existing health insurance policy, your policy would cover COVID related hospitalisations partially. For full coverage you can opt for Corona Kavach plan and get covered for all medical costs if you are hospitalised for 24 hours or more. 

    Alternatively, you can buy Corona Rakshak and get a lump sum benefit. This benefit would help you cover –

    • Additional medical costs not covered by your health insurance policy
    • Lifestyle expenses when you are indisposed
    • Any loan EMIs which you are unable to pay because of loss of job, salary cut or loss of income due to business shutdown

    In fact, a Corona Rakshak policy would make more sense in these cases since it would provide a holistic coverage for your financial needs when you suffer from Coronavirus.

  • If you don’t have a health insurance plan

    If you don’t have a health insurance policy altogether, opt for a Corona Kavach plan. The plan would cover your hospitalisation expenses incurred on COVID with a short waiting period of 15 days. Under other normal indemnity health plans, this initial waiting period can go up to 30 to 90 days which would not be feasible for COVID which is spreading so fast. So, for your short-term needs, you can opt for Corona Kavach and get covered for the hospitalisation expenses incurred on COVID. However, you should also buy a comprehensive regular indemnity health plan for coverage of other illnesses and injuries.

    A Corona Rakshak policy can also be taken, in addition, for getting complete financial assistance for other expenses which you might incur due to COVID. While the Kavach policy would take care of your hospitalisation costs, the Rakshak policy would provide coverage for all other costs which you might incur.

The bottom line

While both Kavach and Rakshak have been developed specifically for covering COVID, the choice between the two ultimately rests in your hands and whether or not you have an existing health plan. If you have an existing health plan, Corona Rakshak would be a good solution and if you don’t, you should opt for Corona Kavach and supplement it with a Corona Rakshak plan. The premiums of both these policies are quite low. You can, therefore, choose both the plans for a comprehensive scope of coverage too. So, assess your needs and then make a choice.

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