Unawareness of Insurance Sub-Limits Can be a Rude Awakening

Assume Rajeev Ranjan has a Rs 5 lakh sum assured on his health insurance policy. Is it true that if he has surgery and his hospital bill is Rs 5 lakh, he will not have to pay anything out of pocket?

No, not always. One of the possible explanations is the presence of insurance sub-limits.

What exactly are sub-limits?

Sub-Limits are simply caps placed on the total amount insured for specific coverages, illnesses, claim types, and so on. The payment shall be made in accordance with the limit stated when the policy was issued, with the sub-limit at the time of claims serving as the deciding factor.

“The sum insured in a policy is the policy’s maximum limit. Sub Limits are included in health insurance policies to limit liability on specific procedures, items, and so on within the sum insured “says Shreeraj Deshpande, SBI General Insurance’s head of health businesses.

Sub-limits can be set for diseases/procedures, with the most common being cataracts, maternity, and a few other ailments listed. “Sublimits may also apply to claims made outside of an insurer’s provider network. Limits on the category of room available to the insured may be capped. There may be sub-limits on road ambulance payments, and alternate treatments, such as ayurvedic and homeopathic, may be available “says Bhaskar Nerukar, head of Bajaj Allianz General Insurance’s health administration team.

For example, a policy may have a maternity sub-limit of Rs 30,000 for a normal delivery and Rs 50,000 for a caesarian (CS). There could be a sub-limit of Rs 2,500 per day on room rent, or 1% of the sum insured per day on room rent, and so on. Cataracts could have a sub-limit of Rs 75,000, for example. However, if a policy provides OPD coverage with an annual limit of Rs 10,000, there may be a sub-limit of Rs 2,500 for dental surgeries.

The first example above means that even if the policy covers Rs 5 lakh, the insurance company will only pay Rs 30,000 for normal delivery and Rs 50,000 for emergency delivery.

So, if a bill for normal delivery is Rs 50,000, the insurance company will pay Rs 30,000, leaving Rs 20,000 to be paid out of pocket.

Why are there restrictions?

“For the same sums insured, policies with sub-limits will be less expensive than those without. Sub-limits are commonly used when certain common procedures have a wide cost variation “Deshpande says The most common example is maternity leave restrictions. A maternity claim today may be worth Rs 50,000 for a normal delivery and may even be worth Rs 3 lakh in some hospitals. Cataract claims could be for Rs 30,000 or Rs 70,000, depending on the cost of the lens used. As a result, sub-limits exist.


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