Have you been rummaging through insurance documents or the internet to find out the actual meaning and implications of the terminology used in a medical policy? Well, you aren’t alone. In this article, we focus on discussing a commonly used term, ‘Annual Aggregate Limit’ (AAL), that plays a crucial role in your medical policy.
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Let’s first decode the term annual aggregate limit. It refers to the coverage amount that has been capped by your health insurer and is available for use within a policy year. If you file a claim that reaches this limit, your provider will cease paying further benefits, regardless of any genuine claims made thereafter.
Some policies quote an annual aggregate limit that is equivalent to the aggregate limit. This is because most policies have a one-year validity.
The aggregate limit can be regarded as the highest amount a provider is liable to pay for the claims that are mentioned as covered in your policy document. Ideally, this is regardless of the number of claims made within your policy’s term.
On the other hand, AAL crowns the total amount payable by the insurer for all covered claims within a policy year. So, let’s presume your policy term is more than a single year; then you might find distinct annual aggregate limits for each policy year.
Do you wish to know why medical insurance companies include aggregate limits in their policies? That’s because they would go bankrupt if they had to pay unlimited coverage to policyholders.
If you are a policyholder claiming a settlement under a medical policy with an annual aggregate limit, here’s a glimpse into the step-wise process.
The policyholder submits a claim to the insurance provider, providing details and supporting documents.
The insurance company reviews the claim in question to verify the terms and conditions of the policy.
Once the validity of your claim is verified, the insurance company pays out the compensation up to the aggregate limit.
Every time your insurer pays out, it will reduce the coverage amount available for further claims. If the payout matches the annual aggregate amount, the insured cannot make another claim until additional coverage is bought or the health policy is renewed.
What you need to remember is that your insurance provider may include several limits on the plan. Hence, make it a point to check every tiny aspect. For instance, the declaration pages, sub-limits, aggregate limits, or any terms of the document are meticulously reviewed before you finalise the policy. It will make it easier to determine the apt coverage suited to your needs. Moreover, don’t forget that the aggregate limits work uniquely for pre-occurrence and per-claim policies, as it might help you find a suitable health policy.
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Reviewed by Dr. Harshita Dahiya 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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