Which of the following BEST describes a hospital indemnity policy?

• A. Coverage that pays a stated amount per day of a covered hospitalization
• B. Pays the actual hospital charges
• C. Covers only medical bills
• D. Reimburses for physician visits

Answer: (A)

Hospital indemnity insurance provides a fixed daily cash benefit for each day you are hospitalized, paid regardless of the actual hospital charges. That per-day, stated amount is exactly what describes a hospital indemnity policy, making it the best choice. It doesn’t reimburse the hospital for actual charges, nor is it limited to paying medical bills or reimbursing physician visits—the latter describe other types of medical expense coverage. The cash benefit can be used for any purpose, such as covering nonmedical costs, which is a key feature of hospital indemnity coverage.