Insurance can be a difficult topic to understand. Trying to decipher the jargon and what it means for your health can sometimes be a difficult challenge. That is why we are going to begin our discussion on insurance terminology. This will be a series of blog posts that will help keep you informed about insurance terms which you can view under our Expatriate Insurance Terminology category.
So, let’s get started!
Coverage Maximum is the first benefit that we are going to discuss. Most international insurance plans have a lifetime maximum, condition maximum, or annual maximum that will be listed under your plan benefits. Here is a breakdown on how each maximum works:
- Lifetime maximum – This is the maximum amount a plan will cover for each insured over the lifetime of the policy. Once the lifetime maximum has been paid, there are no more benefits covered under the policy. So, to give you an example, let’s say your plan has a $5 million lifetime maximum. In the first year, if you have $1 million in paid claims. In this case, the policy will only pay $4 million for eligible expenses for the remaining life of the policy. Once you meet the lifetime maximum, no further expenses are covered and you may need to seek a new insurance plan.
- Condition maximum – Sometimes referred to as a “per injury or illness maximum”, the condition maximum is the total amount the plan will pay per condition. As an example, let’s say you have a $100,000 per injury or illness coverage maximum on your plan. If you have an injury which requires hospitalization, physical therapy, and regular doctor follow-ups, the maximum amount the plan will cover for all of these related expenses is $100,000. If you have a new unrelated illness or injury, you would be entitled to coverage up to $100,000 for that condition.
- Annual maximum – Some policies have a maximum coverage that resets ever year at renewal. To give you an example, let’s say you have a medical emergency that costs $2 million but your plan has a $1.5 million annual maximum. The plan will only cover $1.5 million for that certificate period year. If the $2 million is incurred in the same policy year, then you will pay the remaining $500,000. At the renewal of your plan at the end of the year, the plan will again offer $1.5 million in coverage.
Why is this important? Every insurance plan works differently – a difference in terms can determine how much will be covered for your claims. Sometimes, when dealing with coverage maximums, you will notice that your plan may have a lifetime maximum and a condition maximum. This means that each condition will be covered up until a capped amount, but all conditions will be covered up to the lifetime maximum.
If you have any questions on how the coverage maximum works, or if you have an example that you need clarification on, please let us know as we are more than happy to help!