Before opting for a health policy, individuals should go through the entire specifications of the product, including the coverage, exclusions, waiting periods, and sub-limits, if any, along with the premiums, and opt for a product only after evaluating their requirements.
Let us say Rajeev Ranjan has a health insurance policy that has a sum assured of Rs 5 lakh. If he has surgery where his hospital bill is Rs 5 lakh, does it mean that he will not have to pay anything from his pocket?
Not always. One of the reasons could be the presence of something known as insurance sub-limits.
What are sub-limits?
Sub-Limits are nothing more than a cap placed on the total amount that is insured for particular coverages, illnesses, claim types, and so on. The payment shall be provided in accordance with the limit that was stated at the time the policy was issued, with the sub-limit at the time of claims serving as the determining factor.
"The sum Insured in a policy is the maximum limit the policy will pay. Sub Limits in health policies are incorporated to limit the liability on certain procedures, items, etc., within the sum insured," says Shreeraj Deshpande, head of health businesses at SBI General Insurance.
Sub-limits can be for diseases/procedures, the most common being cataracts, maternity & some other specific ailments listed. "Sub-limits may also apply to claims outside the insurers' provider network. Limits may be capped on the category of the room allowed to be availed by the insured. There may be sub-limits on road ambulance payments, and alternate treatments availed viz. ayurvedic & homeopathic, etc.," says Bhaskar Nerukar, head of the health administration team, Bajaj Allianz General Insurance.
For example, a policy has a sub-limit for maternity, where for normal delivery, it is at Rs 30,000, and for a caesarian (CS), it is at Rs 50,000. There could be a sub-limit of Rs 2,500 per day on room rent, or there could be one per cent of the sum insured per day for room rent, etc. There could be a sub-limit for cataracts at Rs 75,000, etc. If a policy has an OPD cover with an annual limit of Rs 10,000, however, there could be a sub-limit of Rs 2,500 for dental surgeries.
The first example above means that even if the policy has coverage of Rs 5 lakh, the insurance company will pay only Rs 30,000 for normal delivery and Rs 50,000 for a CS delivery. So, if there is a bill of Rs 50,000 for normal delivery, the insurance company will pay Rs 30,000, and Rs 20,000 has to be paid from pocket.
Why are there sub-limits?
"Policies with sub-limits will be cheaper than those without sub-limits for the same sums insured. Sub-limits are generally incorporated where certain common procedures have a wide cost variation," says Deshpande. The most common example is maternity limits. Today a maternity claim could be Rs 50,000 for normal delivery and could even go up to Rs 3 lakh in some hospitals. Cataract claims could be for Rs 30,000, or Rs 70,000, where the cost of the lens used varies. So sub-limits exist.
Why it is important to be aware of sub-limits: "While opting for health insurance, one should not just consider the premium cost but also check the waiting period/exclusions as well as sub-limits, if any. If these aspects are not looked at, one could be faced with an unexpected situation," says Deshpande.
It is of the utmost importance that a person carefully checks for any deductions that he or she would be responsible for paying out of pocket at the time the claim is being submitted. If one isn't aware of the deductions that are being made and isn't prepared to pay for them, it could very well come as a harsh awakening. Reading the prospectus before committing to the purchase is the most critical step to avoid situations like this.