Understanding Policy Terms

Co-Payment & Sub-Limits in Health Insurance

These terms can significantly impact your claim amount. Understand how co-pay and sub-limits work, and choose policies wisely to avoid surprise expenses during hospitalization.

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What is Co-Payment?

Co-payment (co-pay) is the percentage of claim amount that you agree to bear from your own pocket. If your policy has 20% co-pay and the claim amount is ₹5 lakhs, you pay ₹1 lakh and the insurer pays ₹4 lakhs. Co-pay reduces your premium but increases out-of-pocket expenses during claims.

Example:

Claim Amount: ₹5,00,000 | Co-pay: 20%
You Pay: ₹1,00,000 | Insurer Pays: ₹4,00,000

Types of Co-Payment

Standard Co-pay

Fixed percentage (10-20%) on all claims. Common in senior citizen policies.

Reduces premium by 10-15%

Zone-based Co-pay

Co-pay applicable when treatment taken in higher-cost zone than policy zone.

Important for those in smaller cities

Hospital Co-pay

Higher co-pay for non-network hospitals or specific hospital categories.

Encourages network hospital usage

PED Co-pay

Additional co-pay for claims related to pre-existing diseases.

Common in policies covering PED

What are Sub-Limits?

Sub-limits are caps on specific expenses within your overall sum insured. Even if you have ₹10 lakh coverage, room rent may be limited to 1% (₹2,000/day), or cataract treatment capped at ₹40,000. Exceeding sub-limits means paying the difference yourself.

Room Rent Limit

Maximum per day room rent (e.g., 1% of sum insured for shared room, 2% for private). Exceeding this can proportionally reduce other benefits.

₹10L policy → ₹2,000/day room rent limit

ICU Limit

Maximum ICU charges per day, usually 2-4% of sum insured. ICU costs can be ₹25,000-50,000/day in private hospitals.

₹10L policy → ₹20,000-40,000/day ICU limit

Disease-wise Limit

Maximum coverage for specific diseases (cataract: ₹25,000-50,000, hernia: ₹50,000) regardless of sum insured.

Even with ₹10L cover, cataract may be capped at ₹40,000

Treatment Limit

Cap on specific treatments like knee replacement, angioplasty. Treatment cost beyond limit is out-of-pocket.

Knee replacement capped at ₹2L even if actual cost is ₹3.5L

How Room Rent Sub-limit Affects Your Claim

Scenario 1: Within Limit

Room rent: ₹2,000/day (within limit)
Hospitalization: 5 days
Other expenses: ₹4,00,000
You pay: ₹0 extra

Scenario 2: Exceeded Limit

Room rent: ₹4,000/day (exceeded by 100%)
Hospitalization: 5 days
Proportional deduction on ALL expenses!
You pay: ₹2,00,000+ extra

Important: Proportionate deduction applies to ALL hospitalization expenses when room rent limit is exceeded, not just room rent. This can lead to significantly higher out-of-pocket expenses.

How to Choose Wisely

Prefer policies without room rent limits for flexibility during hospitalization
If budget is tight, choose higher sum insured with co-pay over lower sum insured without
For senior citizens, co-pay is unavoidable - focus on coverage over co-pay percentage
Read policy wordings carefully - understand all sub-limits before purchase