Tennessee Insurance Practice Exam

Which type of policy provides reimbursement to a policyholder under a Hospital Expense policy?

1. Indemnity policy

2. Reimbursement policy

3. Term health policy

4. Fixed benefit policy

The correct answer is: Reimbursement policy

A reimbursement policy is designed to compensate the policyholder for actual expenses incurred during a hospital stay, allowing for reimbursement of hospital expenses up to the limits outlined in the policy. This means that when the insured submits claims for the covered medical expenses after receiving treatment, the insurance company will reimburse them for those expenses after verifying the bills and the treatments provided, thus emphasizing the policyholder's out-of-pocket costs. In contrast, an indemnity policy pays a predetermined amount directly to the insured without regard to the actual expenses incurred, which means it might not provide coverage that matches the actual costs of hospital stays. A term health policy typically covers a specific time period or event but does not specifically refer to reimbursement for hospital expenses. Fixed benefit policies pay a fixed amount for specific services, regardless of the actual costs incurred, thus lacking the reimbursement feature associated with the correct answer.