Final answer:
An indemnity plan pays a fixed amount each day during hospitalization, offering a daily cash benefit to the policyholder and is not tied to actual hospital expenses.
Step-by-step explanation:
The type of hospital policy that pays a fixed amount each day that the insured is in the hospital is A. Indemnity. These plans are sometimes known as hospital fixed-benefit plans or hospital cash plans. Rather than covering the full cost of the hospital stay, an indemnity plan provides the policyholder a predetermined daily cash benefit during their hospitalization, irrespective of the actual hospital expenses. This can help cover additional costs like transportation, food, or lost income.
Unlike indemnity plans, surgical policies typically pay for specific surgical procedures, blanket policies cover certain groups or properties, and Medigap policies are designed to supplement Medicare by covering out-of-pocket expenses. It's important for individuals to carefully review the coverage details to choose the policy that best fits their needs. When evaluating an indemnity plan, consider factors such as the daily benefit amount, the maximum number of days covered, and any exclusions or limitations.