The main reason we purchase insurance is to protect us from possible financial loss that can occur from a number of perils. We buy auto insurance to cover damages to our vehicles as well as bodily injuries. Home insurance protects our home as well as our personal possessions from fire, theft, and several other terrible events. Probably the most overlooked type of insurance is medical or health care insurance. This insurance helps to compensate us for medical expenses should we become sick or injured.

As with any type of insurance, there are healthcare limits placed on the amount of benefits that an insurance company is willing to pay out. This limit may be imposed per service or as a total lifetime amount. By limiting the amount that a person can claim, insurance companies eliminate unnecessary and smaller claims. Limits are generally put in place to protect the insurance company from having to dish out millions of dollars for claims. However, some healthcare limits do work in the policy holder’s favor. For example, catastrophic limits put a cap on the amount of money that an insured person is required to pay out of pocket for specified coverage. If an insured person must undergo complex medical treatment or surgery, he or she will be responsible for paying a deductible or a certain percentage of the bill, but that amount is capped.

Without enforcing these types of limits in a medical insurance policy, patients would still have to be responsible for extremely high medical bills. When you think about that, if these rules were abolished, what would the purpose be if having health care insurance? We would still be required to pay for medical services and treatments as well as pay monthly premiums. This cap may apply to a specified illness or injury, such as a heart condition or back injury. For example, if your insurance has set a cap of $20,000 and your share is $30,000, the catastrophic limit states that you will only be responsible for the $20,000 and your insurance policy will pick up the remainder of the cost. Normally, one person wouldn’t face more than one catastrophic event in a lifetime, but if this does occur, you should verify whether or not you have to meet this limit again before your insurance takes over.

When you research different medical insurance policies, make sure to ask if your policy has specific catastrophic limits. As well, ask your insurance agent to clarify if the catastrophic limit clause applies to each individual or if it pertains to the entire family. This will make a huge difference in the final amount that you end up paying.