Hospital Income Insurance

What it protects against
Hospitalization-related expenses that a comprehensive insurance plan may not pay. These expenses may include deductibles and coinsurance, private room or private-duty nursing, long-distance phone calls and transportation. Benefits may be used for any purpose, including child care, pet care, meals out, and lawn and/or house care.

How it works
Hospital income insurance pays a benefit while an insured is in a hospital. It pays a daily, weekly or monthly benefit as stipulated in the contract, regardless of the actual expenses incurred. It is also known as hospital confinement insurance, supplemental medical insurance, and hospital indemnity. Policies typically pay more if the insured is in intensive care, cancer confinement, or needs emergency treatment for accidental injury. Benefits are usually paid directly to the insured. Premium rates are guaranteed renewable, meaning an individual cannot be assessed a higher annual charge unless everyone in the same class is charged the higher rate. Benefits may be reduced at age 65 and/or age 70.

Who needs it
This is supplemental coverage, so you should measure the potential benefits against the costs.

Who may not need it
The affluent may not need this insurance. Also, hospital income insurance is not available in all states.

When to buy it
Rates are often based on the attained age of the insured at time of purchase, which means you pay for the risk you represent. When you are young, premiums will be relatively low. As you get older, premiums will be higher in conjunction with your likelihood to access benefits.

How to pay for it
Payroll deduction for worksite plans.

Terms to Know
  • Attained Age  (View Definition )
  • Concurrent Periods  (View Definition )
  • Pre-Existing Condition  (View Definition )
  • Successive Periods  (View Definition )