What is a hospital cash policy?

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What is a hospital cash policy?
A hospital cash policy is a type of defined benefit policy which unlike other usual health insurance plans does not cover the hospitalization expense and instead make a fixed payment in the event of hospitalization of the insured. The payout extended also comes in handy in case the hospitalization event mars the earning capability of the person.

Such a plan can be opted for supplementing the regular health insurance policy. Currently, the hospital cash plan is also available bundled in an ordinary health insurance plan.

Highlights of the policy

The hospital cash policy makes a payment on a daily basis to meet medical as well as non-medical expenses during the hospitalization term. A hospital cash policy generally and more prominently holds three aspects namely eligibility, daily allowance limit and days for which the coverage would be extended.

Eligibility: For being entitled to the claim, most of the policies require a minimum hospitalization of 24 hours while some other necessitate hospitalization for a minimum of 48 hours or 2 days.

Daily Allowance Limit: In a general case, such a policy pays anywhere between Rs. 500- Rs. 3,000 on a daily basis. In the other scenario, when the insured is admitted in the Intensive Care Unit or ICU, daily allowance limit is enhanced. However, with increase in the daily cash payout, number of days for eligibility of hospital cash while in the ICU gets reduced. For example: If a hospital cash policy extends daily allowance for a period of 1 month of hospitalization on an yearly basis the same shall get reduced to say 15 days or so in case the policyholder is admitted in the ICU.

Other Aspects

Similar to a regular health insurance policy, waiting period on pre-existing medical conditions and initial waiting period applies to hospital cash policies too.

Typically, a hospital cash policy does not provide cover for day care medical procedures. So, in case you are specifically looking out for such a cover you need to confirm beforehand from the insurer.

Though, the policy features the provision of daily allowance during the course of hospitalization, the same in reality is not effected and instead post hospitalization on producing the proof of hospitalization claim is handed over as a lump sum payment.


Story first published: Thursday, December 12, 2013, 10:13 [IST]
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