Be aware of sub-limits in your mediclaim plan

Everyone wants a medical insurance cover for themselves, so they look towards ensuring that they have selected a specific policy and are paying the premium on the policy in time. However, not many policyholders take the time to look carefully at policy details and in many cases, miss situations where benefits may be reduced even for no fault of theirs. This happens due to the fact that some medical insurance policies have a clause that can result in a reduced benefit if the overall sum assured is not very high.

Regular features: The normal working for an individual policy is that there is a sum assured. This is selected in such a way that it will ensure that the expenses incurred on medical emergencies are adequately covered. A simple solution is to go for a total cover of Rs 3,00,000. So, say for instance an individual had a claim of Rs 1,70,000, there is no cause for concern due to the fact that this is well within the overall limit, so, a claim would be fully settled. All that the individual has to ensure is that there is enough coverage taken for their medical requirements, which would depend on age and medical history.

Sub-limits: A change witnessed over the past few years is that there was a sub-limit for various charges, such as room rent or doctors fees, where the sum was fixed as a percentage of the sum assured. So, if the rate was at one per cent and this was considered as a figure of the sum assured, then, the extent of the coverage for a specific expense would be known. This meant that for a policy of sum assured of Rs 3,00,000, the coverage would be Rs 3,000 per day. If there were a higher amount for the specified expense, such as room rent, then, this would be excluded. While this was a blow for the policyholder, in the sense that there could be a lower payout, the individual knew what he was getting into, and hence, he was clear about the overall impact that this would have on the overall claim. This means that the individual had to comfortable with each claim area at the time of filing a claim.

Overall reduction: Now, there are medical insurance policies that even exclude part of the overall claim based on some additional calculations. Take for example, a situation where there is part coverage of the room rent on the sub limits. In such a condition, not only will the room rent be not covered when it falls outside of the limit, but also, it would have a spillover impact on the overall claim. So, for example, if we take a policy that has a sum assured of Rs 3,00,000 and the room rent limit is one per cent per day, then this would come out to Rs 3,000 per day. Take for example a case, where the total claim comes to Rs 2,00,000, and here, the room rent for three days comes to Rs 6,000 per day. In this case, it is not just the Rs 3,000 for three days that will actually be disallowed. In this case, since the room has been covered only for 50 per cent of the total, then the total claim of Rs 2,00,000 will be paid only to the extent of 50 per cent, which is Rs 1,00,000. In this case, the lower amount would be paid even when the total figure is less than the sum assured based on calculations.

(The writer is a CA and certified financial planner)

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