Travel insurance claims ₹1 crore cover, but your medical bill payout can be much lower -- here's why | Factors explained

Travel medical insurance policies have certain sub-limits that may vary by insurer. This leads to a lower payout than the cover claimed during purchase. Here's how it works and what determines them.

If you travelling abroad from India, you may need more than just a visa and a passport. Some countries require visitors to have travel insurance before they are permitted to enter, so that they can cover unexpected medical expenses, accidents or trip disruptions during their stay.

The Schengen countries, Cuba, Romania, the United Arab Emirates (UAE) and Turkey are among the destinations where buying a travel insurance is mandatory for obtaining a visa or stepping outside the airport.

How much travel insurance cover do you need?

The amount of travel insurance you need largely depends on the destination and its visa requirements. Countries usually set minimum coverage based on their cost of healthcare, the duration of the stay, the type of visa and the medical or travel-related risks they want visitors to be covered against.

For instance, Indian travellers applying for a Schengen visa must have a valid insurance policy with at least €30,000 ($33,783) coverage, which shall be valid throughout their stay in a certain country, such as France.

The requirement can be higher for other destinations. For tourist and visit visas to the UAE, the standard requirement is a minimum of $50,000 in emergency medical coverage for the entire duration of a person's visa. Some visa processing centres may require coverage of up to $100,000, according to a blog post by NRI-focused fintech startup Belong.

Why actual payout on a ₹1 cr cover may be smaller

Though a $100,000 cover can translate to around ₹1 crore when converted, making it sound like a hefty amount, the actual payout you receive during medical emergencies is much lower due to something called health insurance sub-limits.

A sub-limit is a specified cap that a travel insurance policy may place on certain benefits such as hospital room rent, ICU charges, doctor consultations and other medical expenses. Some plans may also have specific limits for expenses arising from an illness or accident, according to a report by Policybazaar.

This monetary cap is a common feature across insurance products and can help insurers offer policies at different price points, giving travellers more options based on their coverage needs and budget.

Key travel medical insurance sub-limits

The different kinds of sub-limits on travel medical insurance are generally imposed on room rent, ICU (intensive care unit) charges, operation theatre and surgery costs, anesthetist charges, doctor consultation, follow-up visits, diagnostic test and ambulance costs.

Across plans currently available in the market, sub-limits on core hospitalisation benefits vary widely:

How age plays a role in determining sub-limits

Another aspect travellers should be aware of is that sub-limits may vary by age. They do not necessarily apply uniformly across all age groups, with some plans introducing specific limits from certain age bands.

The threshold can also differ across insurers:

Earliest applicability: Sub-limits on insurance claims can begin from as early as 50 years in some plans.

Mid-segment applicability: A larger segment of insurers introduce sub-limits from 56 years onwards.

Senior citizen applicability: Several plans reserve sub-limits specifically for the 61-years-and-above age bracket, sometimes structured as dedicated senior-citizen products.

Health insurance plans without sub-limits may cost you more, while plans with sub-limits are comparatively affordable, a separate Policybazaar report noted. This happens because the liability of an insurance company reduces with the help of putting a monetary cap on the amount that can be claimed.