The claim settlement of your medical policy may not go your way if you are not careful. It turns out that quite a lot of people are disgruntled with their policies because the claims were settled partially and they were left bamboozled. At the core of the problems lie the proportionate clause in health insurance, and the whole room rent sub-limit bind. Read on to know how you can escape without any glitches.
The proportionate clause in health insurance
Sub-limits are the segments that build up the entire sum insured (the payout of your health insurance policy). They signify the extent to which your policy will pay for different aspects of your treatment such as room rent, nurses’ or doctors’ fees, charges for surgery, price of medicine, etc. No matter how much sum insured you are entitled to, you cannot exceed the cap or the sub-limit.
For example, if your room rent sub-limit is INR 2000 per day, you should adhere to it. If it exceeds by even a fraction, you’d have to pay the excess from your pocket.
In other words, a percentage will be deducted from your sum insured to meet each of the sub-limits. You can structure the sub-limits any way you like. There are no strict IRDA rules on it. It all depends on your insurer. There are health policies that come without sub-limits. But they are much more expensive.
How to calculate proportionate deduction?
The room rent sub-limit is really the most important. That is because insurers benchmark the reimbursement of the other expenses to the room rent. Usually, you are advised to cap the room rent at 1% of the total sum insured.
If your room rent actually exceeds your sub-limit, it will have an adverse effect on the rest of the payment too. The insurer will calculate the percentage by which you have gone beyond the limit, and proportionately deduct sums of money from the amount set aside for other sub-limits. This is called the proportionate clause in health insurance or proportionate deduction.
Suppose your room rent takes up 25% more than what was allotted for it, all the other sub-limits will go down by 25%. So you are incurring quite a loss here because your insurer pays your sum insured partially.
Naturally, this crafty little trick causes a lot of aggrievement and resentment and makes people lose their faith in health insurance policies.
What should you do?
If possible, opt for policies that don’t tie you down with sub-limits.
If you have to purchase a sub-limit policy, then enquire if the room rent sub-limit has a bearing on the rest of the claim settlement. If yes, steer clear from it.
All health insurance policies clearly stipulate sub-limits (the ones that contain them). So read the fine print carefully. Consult insurance experts if needed. This is not something you should rush into. Ponder everything out before signing the dotted line.