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

  • Charge for expenses associated with administering a group employee benefit plan.
  • Insured's age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured's then attained age. Upon conversion, the premium usually rises substantially to reflect the insured's age and diminished life expectancy.
  • In hospital income protection, when a patient is confined to a hospital due to more than one injury and/or illness at the same time, benefits are paid as if the total disability resulted from only one cause.
  • A coverage limitation included in many health policies which states that certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.
  • In hospital income protection, when confinements in a hospital are due to the same or related causes and are separated by less than a contractually stipulated period of time, they are considered part of the same period of confinement.