What is the implication of a low coverage limit in an insurance policy?

A low coverage limit in an insurance policy indicates that the maximum amount the insurance company will pay for covered services is relatively small. Thus, if an individual requires medical care, they may find that a significant portion of their medical expenses will not be covered by the insurance. This leads to higher out-of-pocket expenses, as the policyholder is responsible for paying the difference between the healthcare costs and what the insurance policy covers up to its limit.

While it may seem effective to have lower monthly premiums, this is often a trade-off. A low coverage limit may indeed result in lower premiums, but it does not imply that the policy provides sufficient financial protection when medical services are needed. Additionally, having more extensive coverage options or universal coverage is generally associated with policies that offer a higher coverage limit, so these aspects are not satisfied when limits are low.