Double Health Insurance: Indemnity vs Compensation and What Happens With Two Policies

Many Israelis hold both a Shaban plan and a private health policy that cover exactly the same thing — paying twice without getting twice. In this article: what double insurance is, the fundamental difference between compensation and indemnity, and when double coverage actually makes sense.

Compensation vs indemnity — the deciding difference

The most important distinction in double insurance is between two types of coverage:

• Indemnity insurance — meant to reimburse an expense you actually incurred. Even with two policies, you only receive up to the amount of the expense — not double.
• Compensation insurance — pays a fixed, pre-agreed sum when an event occurs. Here you can actually receive payment from each policy separately.

So two indemnity-type health policies for the same coverage are usually redundant, while two critical illness (compensation) policies aren’t considered double insurance.

What happens with two indemnity policies

In indemnity coverage, the insured is compensated for the actual loss and no more. If two policies cover the same event, the companies split the payment — for example, if both cover a transplant up to 1M ILS and the transplant costs 1M ILS, each company pays half a million, and you don’t receive two million. The upshot: paying a double premium doesn’t create double coverage. We covered the claim order in Shaban vs private insurance.

When double coverage does make sense

There are cases where holding two policies is justified: compensation-type coverage (like critical illness insurance) that pays a lump sum, or complementary coverage that doesn’t truly overlap. The rule: check whether the coverage overlaps and what type it is before canceling anything. Canceling an old policy can cost you insurance continuity and a new waiting period — see switching insurers.

How Ravit can help

Identifying whether you have redundant double insurance requires understanding what each policy covers and what type it is. Send Ravit your policy documents on WhatsApp, ask in plain language, and Ravit helps map the overlapping coverage — with clause references, and honesty when you need to check with the company or a licensed professional before canceling.

The information in this article is general only and does not constitute medical, insurance, legal, or pension advice, and is not a substitute for reading your policy terms or consulting a licensed professional. Coverage, amounts, and conditions vary between policies and change over time — always verify against your own specific policy and an authorized professional.