Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

• A. Indemnity
• B. Reimbursement
• C. Fixed-benefit
• D. Non-forfeiture

Answer: (B)

When a Hospital Expense policy pays benefits, the focus is on giving the insured money back for the costs they actually incur. The reimbursement form is designed to repay the policyholder for covered hospital expenses up to the policy limit, typically after the insured submits itemized bills. This makes the insured the recipient of the payout tied directly to their real charges.

In contrast, fixed-benefit or indemnity-style hospital coverage provides a predetermined amount per day or per event, regardless of the exact charges incurred, which is a different payout mechanism. Non-forfeiture relates to life insurance, not hospital expense coverage. Therefore, the option that pays benefits to the policyholder for hospital costs is reimbursement.