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What is Hospital Cash Benefit Policy and How Can it Benefit You?

It is rightly said – the greatest wealth a man can have is good health. You may take numerous preventive measures to remain in the pink of health. However, there may be times where you may succumb to certain ailments or diseases, which require hospitalization. In order to financially protect yourself against expenses arising out of hospitalization, you may consider investing in a health insurance policy.
An important thing to note is that most health plans do not offer coverage for inadmissible expenses like X-ray cost or expenses for an accompanying family member. The good news is that you receive coverage for such expenses by purchasing a hospital cash benefit policy.

Understanding the daily hospital cash benefit policy

As the name suggests, a daily hospital cash policy offers a fixed payout on a daily basis in an event that you are hospitalized. It is important to note that this amount does not depend on the medical expenses incurred. You may, therefore, use the amount any way you deem fit.Most daily hospital plans require that you need to be admitted for a minimum of 24 hours in order to avail of the benefit of this policy. Some insurers may extend this to 48 hours.

Consider an example where you have a mediclaim plan of INR 2 lakh, with a hospital cash insurance policy of INR 2000 per day. In an event that you are hospitalized for 5 days, you will receive an amount of INR 10000, i.e. INR 2000 for 5 days. At the same time, your medical bills may be claimed up to a limit of INR 2 lakh.

Benefits of a hospital cash policy

Many financial advisors recommend purchasing a hospital cash benefit policy as a rider or an add-on to their existing insurance plan. There are numerous reasons for this.
Following are four reasons how such a plan may benefit you.
  1. Covers expenses that would not be covered otherwise
A hospital cash insurance policy helps in reducing your financial burden to a great extent. Such a plan may be used to meet expenses that may not be completely covered by health insurance. You may use the amount to meet travel expenses, inadmissible hospital expenses, or household expenses. Insurance providers do not put any restriction on how the amount may be utilized.
  1. Acts as an income replacement
Chances are that you may not be able to report to work due to your medical condition. You may temporarily lose out on your regular source of income.A daily hospital cash benefit plan acts as an income replacement, especially for daily-wage earners and self-employed individuals, who may stop receiving a steady flow of income if they are hospitalized.
  1. Takes care of high hospital bill amount
There may be chances that your existing health insurance policy does not have a high amount of coverage. Though it may cover most of your hospital bills, in case of a higher claim, your health plan may fall short. Such a rider helps you cover the extra cost, thus reducing your financial burden.
  1. Offers tax benefit
Like any health policy, a hospital cash benefit plan offers tax benefit. You may avail of a deduction of up to INR 25000 as persection 80D of the Income Tax Act, 1961. If you are a senior citizen, you may avail of a higher amount of INR 50000 on premiums paid towards your plan according to section 80D. This helps you reduce your tax liability and save a significant amount of money.

A hospital cash benefit policy offers a host of benefits. You may, therefore, consider these advantages and invest in such a plan at the earliest. By doing so, you may financially safeguard yourself from unexpected expenses arising due to your hospitalization.
What is Hospital Cash Benefit Policy and How Can it Benefit You? What is Hospital Cash Benefit Policy and How Can it Benefit You? Reviewed by Lokesh kumar on 10:16 AM Rating: 5