Hospital indemnity insurance pays a set amount for each day that an enrollee is hospitalized, without regard to the hospital expenses incurred. This supplemental insurance policy may also include payments per ambulance trip, surgery visit, or even increased payments for more critical ailments such as cancer or stroke.

Payouts from a hospital indemnity plan can be used for whatever purpose the beneficiary chooses, because this type of plan is not connected to specific services; payments are dependent on certain events.

For seniors on a limited income, this kind of policy can offset some of the extra expenses incurred by a hospital stay, ambulance trip, etc. that are not covered by their existing coverage.