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Unlike indemnity insurance, most health insurance policies cover about 80% of hospitalization costs. The remaining 20% cost is borne by you. In situations where the total hospitalization fee is $40,000, you’d have $8,000 to fess up. This is a steep expense for most people, considering that 40% of Americans can’t cover emergencies of $400 without skipping a bill payment, borrowing, or going into debt.

This is where hospital indemnity insurance comes in. Hospital indemnity insurance covers the lapses of your regular health insurance. It is designed to supplement your regular health insurance, not replace it. Policy plans typically cover illness, injury, surgery, ambulance services, etc.

Although intended to be used for hospital care, benefits from hospital indemnity insurance (usually a lump sum) are paid to you and not to the hospital. This means you can spend it on whatever you choose.

How does it Work?

Some employers offer a group health insurance plan to their employees. If your employer does not, you can purchase an individual policy with an insurance company. Hospital indemnity insurance can cost as little as $7 and as much as $463. Its cost depends on several factors like:

• The benefit amount to be paid
• Whether or not you include dependents on your policy
• Whether or not it’s a group policy

Benefits are paid depending on the number of days you spend in the hospital. If you were hospitalized for three days and your policy pays $300 per day, you will receive a lump sum of $900. Again, you receive it, not the hospital, so you’re in charge of appropriating the funds. When you sign up for a policy, there are several factors you want to check if your plan covers:

• a limit to the number of days the policy will reimburse you for; for example, a 30-day limit
• Initial confinement benefits i.e., bonus given to you for getting admitted separate from the benefit you get per day.
• Childbirth. This covers a mother’s hospital admission as well as an ill infant’s admission

Why Do I Need Hospital Indemnity Insurance?

Hospital indemnity insurance provides a safety net when life’s unforeseeable circumstances knock you down. Here are a few reasons why you need hospital indemnity insurance:

• If your health insurance plan will require you to meet a large deductible before your health benefits kick in, then you should get hospital indemnity insurance for maximum protection.
• If the emergency savings in your health savings account cannot cover the extra 20% uncovered by your health insurance.
• On 17th October 2020, a total of 63,152 hospitalizations occurred due to COVID-19. If you are classified a highly susceptible to the virus, you should consider getting hospital indemnity insurance.

Summarily, no one wishes for poor health, but it would be folly not to plan for it. In our current inimical climate, wise investors know that health is wealth. They take preventive steps to curb illness such as regular exercising, eating healthy meals, and routine hospital check-ups. They also safeguard their health to lessen the financial burden on themselves and their loved ones in the event of illness. Hospital indemnity insurance is one way to safeguard your health and you can also read about life insurance and it benefits. Not sure where to start? Call or write to us to find out.