Hospital Cash vs health insurance policies

A daily hospitalisation cash plan (DHC) is a pre-defined benefit. A fixed amount per day of hospitalisation is paid to the insured / policyholder. The plan is designed to pay the policyholder a lump sum for each day he needs treatment as an in-patient, in either a government or private hospital. The amount helps to pay for any kind of expenses incurred before, during or post hospitalisation. The daily benefits are linked to the total sum assured of your plan.

DHC offers you fixed daily benefits, per 24 hours spent in hospital. It takes care of incidental expenses like special diet, commuting to the hospital and back, hospital stay with the patient, etc. For instance, An individual bought a DHC policy with cash benefit of Rs. 5,000 for per day of hospitalization (exceeding 24 hours) for up to 45 days. If he was hospitalised for five days, he will receive Rs. 25,000. The plan has no link with your actual medical expenses incurred. Thus, you could either be in a loss if your actual expenses are more or gain if the expenses are lower than the limit. There is no connection with actual expenditure.

On the other hand, a health insurance policy is bought to protect you in case of a medical emergency. Health insurance can prove to be a source of support by taking care of the financial burden your family may have to go through. An adequate health insurance plan reimburses inpatient hospital bills. Buying a proper health plan would help you in saving your hard earned savings and other assets.

A DHC plan restricts the number of days per year in a policy. This means the insured / policyholder will have to spend money from his pocket if his hospitalization period exceeds the limits prescribed in the policy. For example, some policies provide 45 days as maximum number of days of hospitalization in a year. So if an insured / policyholder is hospitalized for 60 days, then he has to spend money from his money for the remaining 15 days as his hospitalization period exceeds the limits prescribed in the policy. Thus, you also need to keep an eye on sub-limits, particularly the ones specifying the maximum number of days spent in ICU and for regular hospitalisation in a year.

Further, for surgeries a pre-fixed amount is paid and the number of surgeries / policy period is also limited. Usually, the number of surgeries is restricted to three.

Thus, it is better to buy an adequate health insurance policy as a basic protection for your family against medical emergencies. Remember, DHC is not a substitute for health insurance, but a supplement to the existing health insurance covers bought individually or provided by the employer.