An indemnity policy pays a fixed dollar amount to the insured for expenses covered in the policy. For example, if you are hospitalized, the policy might pay a certain amount for every day you are in the hospital.
Some pay additional benefits, such as part of the cost for a private duty nurse, or a fixed dollar amount per day for special units (skilled nursing facility, burn unit, etc).
Coverage is easy to understand and available to people under age 65. Premium rates tend to be stable over time and the policy pays you cash. You do not have to use the money on medical expenses.
The disadvantage is that they do not cover as many different situations as other types of policies. Generally, an indemnity policy only covers acute hospital care. It may also have restrictions on when payment can begin.
The benefits may be reduced when you turn 65 and the money they pay you rarely keeps up with inflation. You will need to update your coverage to match rising health care costs, and that will result in a higher premium.
Most indemnity policies are not tailored to cover the gaps in Medicare.