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August 5, 2019

Accident Insurance vs. Hospital Indemnity Policies: What is the Difference?

Accident Insurance vs. Hospital Indemnity Policies

Accident insurance and hospital indemnity policies are secondary health coverage options you can purchase to help alleviate medical costs your primary insurance policy might not cover.

Depending on your situation, one may be better for you than the other. However, it’s up to you to research which type of coverage is most suitable for your needs.

Accident Insurance

Accident insurance is a supplemental option to your primary health coverage. It acts as a safety net to help you pay out-of-pocket medical and non-medical costs from an accident or injury.

Americans all together visit doctors a combined 68.2 million times a year to treat injuries.2 6 in 10 Americans don’t even have $500 in savings2, which can make it difficult for them to pay for a doctor’s appointment to treat their injuries.

This is when it can be beneficial to have an insurance plan.

How does accident insurance work?

This types of plan provides cash benefits that are paid directly to you, not doctors and hospitals, on an indemnity basis.2 In other words, insurance companies will pay you a specific amount of money, depending on what is written in the policy.

Additionally, intensive care or hospital confinement indemnity are other per-day benefits that may be offered, depending on your specific policy.

Even if your health plan covers 100% of your accident, your benefits are still payable to you.2 It’s up to you to determine the best use of these funds – whether for medical expenses like treatment or medication, to supplement loss of work or other bills, or for any other useful reason.

What does it cover?

With this insurance, you can use cash to cover any expenses related to your accident – potentially including non-medical expenses like childcare, transportation to a therapist, and even rent or groceries.2

The benefit amount you receive depends on your diagnosis and the severity of your injury, how your injury was treated, and the type of coverage you have.3

With accidents covered by your plan, your coverage goes with you from start to finish.2

Accidents covered varies between insurers, but may include:

  • Accidental death and dismemberment (accident insurance is not accidental death insurance)
  • Disability
  • Fracture injuries

Though each accident insurance is different, some injuries may not be covered by your plan.

Reasons to consider having it:2

The following are some reasons you might consider getting accident insurance:

  • Accidents can happen when you least expect them
  • Can be a safety net to help cover medical and non-medical expenses
  • Can help if you don’t have the necessary savings

Other reasons might include:

  • You can often choose how your benefit is paid
  • Typically helps to cover any cost

Hospital Indemnity

In lieu of accident insurance, another option you can consider is hospital indemnity. Similar to accident insurance, it is a supplemental option to your primary health coverage. This type of coverage pays you direct cash if you have to go to the hospital.1 If you don’t go to the hospital, your benefits won’t get paid to you.

How does hospital indemnity work?

Even with insurance, hospital indemnity can help cover certain medical expenses, helping to meet deductibles and co-pay.

What does it cover?

Different coverage options are available, including:3

  • Short-term and long-term coverage
  • Plans for specific situations

Benefits can be purchased for individuals or families, and may be subject to a deductible.3 When you insure more people you possess more risk, so your plan will likely cost more. However, basic individual plans can be relatively inexpensive.3 It’s important to research the cost with different companies to compare prices before making a final decision.

There are numerous factors that help determine the cost of coverage, based on the underwriting. These may include the age of the person seeking coverage, the amount of coverage planning to be purchased, and the insurance company you’ve purchased from.3

Examples of coverage

Depending on your specific policy, your plan might include, but is not limited to:1

  • Hospital admission
  • Overnight stay
  • Intensive Care
  • Emergency room visit
  • Outpatient procedure
  • Specified disease
  • Accidents

This type of coverage is supplemental to your primary health plan2, which means it’s meant to fill gaps not covered by insurance. Hence, it typically doesn’t cover routine doctor’s visits, prescription drugs, and other costs. It’s best to refer to your specific policy to see what’s included in your plan.

Reasons to consider having it

You might consider getting this type of coverage if you have no cash saved or if you need assistance replacing lost income. Additionally, it could be beneficial in helping to cover unexpected out-of-network expenses.1

Accident insurance vs. Hospital Indemnity: Which should I get?

Now that you’ve learned about both accident insurance and hospital indemnity, you’re probably debating which you should get.

Ultimately, that decision is up to you. One plan might personally work better for you than another, so it’s important to follow up with your insurance company or a local licensed insurance agent to discuss any questions or concerns you might have. Once you’ve determine which coverage would suit your needs best, you can then make an informed decision.

  1. GLGAmerica.com, Is Hospital Indemnity Insurance Worth It?, 2019

  2. Guardiandirect.com, What Is Accident Insurance Coverage and What Does it Cover?, 2018

  3. Insurancequotes.org, Should You Buy Supplemental Health Insurance? 2019

Categories: Accident Insurance, Hospital Indemnity, Supplement Health Insurance

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