What is the function of Hospital Income or Indemnity insurance?

Hospital Income or Indemnity insurance is designed to provide a daily cash benefit to policyholders who are hospitalized. This type of insurance offers a specific amount of money for each day that the insured is confined to a hospital, regardless of the actual medical expenses incurred. This cash benefit can be used by the insured for any purpose, allowing them to cover indirect costs related to their hospitalization, such as lost wages, transportation, or other personal expenses, providing financial support during a challenging time.

The focus of this insurance is not on covering medical bills directly or reimbursing healthcare providers, but rather on providing a financial cushion for individuals who may face income loss or increased expenses while hospitalized. Hence, the primary function is to give a fixed daily benefit rather than reimburse for medical costs or pay the hospital directly.