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Sub-limits on health insurance can make your policy benefits insignificant


Take the case of Hanu Shukla, a Lucknow-based marketing executive, who bought a health policy with maternity benefit cover with sum insured of 10 lakh around five years ago. He had even paid a premium of 61,000 ( 12,200 per annum) thereafter. But, after his wife Neeshu Tripathi was admitted to a hospital for the delivery of their first child, Shukla found that he was only eligible for a reimbursement of 50,000 towards maternity benefits. The policy had a sub-limit on the overall sum insured for maternity benefits. There are many subscribers like Shukla who are ignorant of the sub-limits and have had to shell out money for treatment costs when their insurance claims go beyond the sub-limits.

Sub-limits in health cover

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Sub-limits in health cover

“Several insurers often impose a mandatory co-payment and sub-limits clause on the health cover when you buy a policy to reduce the premium. While this may reduce your premium to some extent, it will cost you dearly when you file a claim,” said Venkatesh Naidu, CEO of Bajaj Capital Insurance Broking Ltd.

Sub-limit: This is the term used by insurers for a monetary limit on expenses for disease/illness treatment, room rent, post-hospitalisation, and pre-planned medical procedures. In such a case, the insurer will only cover costs up to a specific limit; the policyholder must cover expenses above that limit.


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Do note that sub-limits can vary, depending on the policy and the insurer. It could be a percentage of the total amount insured or up to a certain amount specified by the insurer. For instance, ICU fees and hospital room rent are generally capped at 2% and 1%, respectively, of the total sum assured.

Biresh Giri, executive vice president and appointed actuary at ACKO insurance, said, “Typically, in health policies, non-medical expenses (consumables) are not covered but this often makes up about 15-20% of the medical bill. Besides, the capping on room rental cost is generally at around 2% of the sum insured. So, subscribers need to check whether the insurer covers non-medical expenses in their policy term. If the policyholder exceeds the insurance coverage, they must bear the difference from their pocket.”

Higher sub-limits: There are insurance covers with higher sub-limits, depending on the specific treatment pertaining to cataract surgery, knee replacement surgery, maternity, etc. “The expenses for cataract surgery are usually capped at 24,000 and that for maternity and oral chemotherapy at 50,000,“ said Yashendra Sharma, head-employee benefits at Alliance Insurance Brokers.

However, hospitals can bill you up to 1.5 lakh for cataract surgery or maternity admissions, which means you might have to bear more than two-thirds of the cost from your pocket.

Regulatory norms: The Insurance Regulatory and Development Authority of India (Irdai) has not issued any specific regulations for sub-limits in a health policy. Also, not all health insurance policies come with a sub-limitclause. A few insurers impose sub-limits, whereas some others charge a considerable premium to remove the limits. Sharma said the decisions on sub-limits are mainly taken by insurers. “Irdai, however, has asked insurers to pay for some listed procedures that hadn’t been covered earlier in the health policy,” added Sharma.

Why sub-limits? “One of the main goals of sub-limits is to help insurers decrease their overall claims while underwriting health policies. Secondly, it also decreases their liability limit and the payments to be made to the policyholders,” said Sharma.

Ankit Agrawal, CEO and co-founder of, said, “Sub-limits are fixed by health insurance providers to reduce the chances of false claims filed by the policyholders and to ensure fair usage of the coverage provided.”

While insurers evaluate such parameters to impose sub-limits on the treatment cost of several surgeries, you must know that policies with sub-limits bought for planned surgeries may not be advantageous at any cost.

For instance, some policies may not benefit newly married couples because they have a four-year waiting period to cover maternity care and allow expenses up to a maximum of 50,000 per policy, subject to terms and conditions.

So, if you buy a policy with 10 lakh sum insured, you will roughly have to pay a premium of 50,000 (including taxes) by the time your policy’s waiting period gets over. Moreover, the policy will not be applicable in case you get hospitalized for childbirth within four years of the waiting period.

Mint take: You should choose a health policy by comparing different policies online or take an advisor’s help to select one. You must avoid buying a health policy with specific procedure sub-limits.

Before purchasing a health insurance policy, you should carefully study the policy paperwork and consider various factors, including co-payment choices (where you must pay a predetermined portion of the claim amount) and the list of exclusions. It would help if you also familiarize yourself with the alternatives for “limits,” “deductible,” and “co-pay” in your health insurance policy.

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