An indemnity benefit is a fixed cash amount paid upon a qualifying event, regardless of the actual expense incurred. In long-term care or chronic-illness riders, indemnity benefits pay the stated daily or monthly amount once eligibility triggers are met, without submitting receipts (subject to tax rules and plan limits). Indemnity contrasts with reimbursement, which repays documented costs up to a cap. Indemnity designs simplify claims administration, support flexible informal care, and can leave residual funds for other needs, but they require careful coordination with public benefits and tax reporting.

Families choose indemnity-style LTC riders to pay a fixed monthly benefit without receipts, enabling informal care and flexibility. Advisors explain tax limits for per-diem benefits and how payments coordinate with other coverage.