A sub-limit is a restriction or monetary cap on your health insurance plan. When an insurance plan has a sub-limit, the amount of reimbursement or insurance claim is reduced. Thus, the insurer’s liability comes down as some portion of the financial risk is borne by the insured.

Let us understand the sub-limit meaning with the help of an example.

Kavita purchased health insurance worth ₹2,00,000. However, it had a sublimit of ₹75,000. If her medical expenses total up to ₹1,00,000, the insurance company will pay her ₹75,000 and the remaining amount of ₹25,000 will be paid by Kavita from her pocket.

Thus, the sub-limit insurance example makes it clear that the sub-limit determines how much financial expenditure will be borne by the insurance provider if you raise a claim.

Sub-limit is one of the most important components of any health insurance policy, as it directly affects the liability and claims of insurance. Not all insurance plans have a sub-limit and many times, the insurers also give you an option to choose a plan with or without the sub-limit.

Understanding how sub-limits apply helps you manage out-of-pocket expenses, choose appropriate coverage, prevent any claim-related disputes, and gain maximum value from the premium paid. It is also important to note that insurance plans with no sub-limits have a higher premium, while those with sub-limits come at a lower premium rate.

Sub-limits in health insurance can be applied to various components of the insurance plans. Based on the type of expenses, sub-limits can be classified into the following categories.

• Sub-Limit on Room Rent: When a sub-limit is applied to the hospital room rent, the insurance company covers the hospital room charges per day only up to the limit mentioned. Any excess room rent charge above the sub-limit must be paid by the insured.

For example, the room rent sub-limit is ₹3000 per day and the actual room rent charges are ₹4000 per day. In this case, the insurance company will pay ₹3000 per day only. The excess amount will be paid by the insured.

In some cases, the insurance plan may also limit the hospital room type. For instance, the policy may include coverage for a twin-sharing room. And if you want to choose a private room, you may have to spend money from your pocket.

• Ailment Sub-Limits or Ailment Capping: Another type of sub-limit is placed on specific ailments, as mentioned in the insurance policy. It may include diseases such as kidney stones, piles, cancer, cataracts, hernia, tonsils, etc. The exact sub-limit on specific ailments may vary from one insurer to another. Even if the sum insured is high, the insured cannot claim more than the sub-limit if there is a disease-specific condition.

For example, if the sum insured is ₹10 lakhs and the sub-limit for cancer treatment is 50%, the insurer cannot claim more than ₹5 lakhs because of the sub-limit imposed.

• Post-Hospitalisation Sub-Limit: In many cases, patients may require extended medical care even after getting discharged from the hospital for recovery and rehabilitation. Sub-limits may also be applicable to such post-hospitalisation expenses that a policyholder may incur. It includes various charges such as doctor follow-ups, tests, physiotherapy, etc.

• Low Premium: One of the primary and most significant benefits of sub-limits in health insurance is that you pay lower premiums than those plans that do not have a sub-limit. Since the insurer’s liability is reduced, they charge a lower premium. Thus, insurance plans with sub-limits help you to save on insurance premiums significantly.

• Enhances Policy Transparency: Sub-limits clearly mention the maximum claim that you are eligible to receive as per the policy terms. Since you know the exact amount, it helps you to efficiently manage the out-of-pocket expenses and make wise decisions related to medical treatments.

• Broader Coverage: Sub-limits may put restrictions on the amount in certain areas, but they may offer better overall coverage. It can be beneficial for those who want coverage for medical needs beyond the treatments with sub-limits.

• Promotes Thoughtful Choices: The caps placed by sub-limits encourage you to make thoughtful choices while opting for medical treatments. For instance, when you know the sub-limit amount, you opt for services that are necessary and fit the insurance frame. Thus, you abstain from choosing any unnecessary treatments or expensive services.

• Increases Out-Of-Pocket Expenses: Since the sub-limit places a cap on the payout amount, you are required to bear the excess medical bills, which may increase your spending.

• Limited Choices: capping in insurance also restricts the choices when it comes to a hospital room, as you may have to choose a shared room to get the expenses covered under insurance.

• Limited Coverage: Treatment for diseases specified under the sub-limits may restrict the coverage amount that you receive. Expensive treatments, such as robotic surgeries and advanced procedures, may not be fully covered.

Sub-limits can impact your medical insurance claim; hence, you must consider the following factors to ensure you receive the desired insurance coverage.

• Pay Attention to Your Healthcare Needs: When choosing an insurance plan with sub-limits, pay attention to your healthcare requirements. For example, if you prefer a private room in a hospital, opt for insurance plans that have a sufficient room rent sub-limit. Or opt for a plan without a sub-limit on room rent.

• Comparison is the Key: There are plenty of options available today when it comes to insurance plans, each offering different benefits and features. You can compare different plans based on the sub-limits they have on the room rent, specific diseases, surgeries, etc., and choose the most beneficial one from the lot.

• Sub-Limit Add-On: Many insurers also provide the option to waive the sub-limit in health insurance with the help of an add-on. By paying an additional premium, you can remove the sub-limit and get full coverage from the insurance plans.

• Opt for a Higher Sum Insured: Choosing an insurance plan with a higher sum insured may help to set off the cap set by sub-limits. Thus, you can get an overall wider coverage, even with sub-limits.

• Read the Policy Documents: It is wise to read the policy documents carefully to understand the sub-limits and how they will impact the claim payout. It also helps you to be aware of the facts in advance and prevents unpleasant surprises later on.

Sub-limit in health insurance is an essential feature that has a significant impact on your overall coverage and claims. While it offers many benefits, there are some disadvantages too that must be considered before you buy a plan with sub-limits.

Some of the best health insurance policies in India offer policies with and without sub-limits to accommodate the varying requirements of policyholders. If you are looking to reap the benefits, such as low premiums, thoughtful choices and overall broader coverage, you can opt for the TATA AIG mediclaim policy with a sub-limit, such as the Medicare Select.

However, if you want full coverage, flexibility and do not want to incur out-of-pocket expenses, TATA AIG's high coverage health insurance plans without sub-limits are here to support you.