Question

All of the following statements regarding a hospital indemnity plan are correct EXCEPT

A) another name for the plan is a hospital expense plan
B) the plan pays a flat dollar amount as a daily benefit each day the insured is hospitalized
C) payment is made directly to the insured, not the insurer
D) the benefits from the policy may be used toward deductibles and coinsurance payments

Answer 1

In a hospital indemnity plan, the payments are made directly to the insured, can be used for deductibles and coinsurance, and it pays a flat daily benefit during hospitalization. However, a hospital indemnity plan is not the same as a hospital expense plan.

Step-by-step explanation:

The subject of a hospital indemnity plan involves understanding how such insurance plans work regarding payments and benefits. One correct statement about a hospital indemnity plan is that it pays a flat dollar amount as a daily benefit each day the insured is hospitalized (Statement B). The payments from a hospital indemnity plan are made directly to the insured rather than the insurer, which gives the insured the flexibility to use the funds as needed (Statement C). Additionally, the benefits from the policy can be used to cover various costs, such as deductibles and coinsurance payments (Statement D). However, the erroneous statement in the question is Statement A, as a hospital indemnity plan is not another name for a hospital expense plan; these are two different types of insurance plans.