Definition - What does Limited Policy mean?
Limited Policy coverage is a basic type of insurance policy that only pays benefits in the event of certain occurrences or specific events as specified in the contract.
For example, limited life insurance policies may only pay benefits if the insured person dies from a specified cause such as a sudden heart attack or auto accident.
The cost for these types of policies is generally significantly lower than other more general insurance contracts and common in employer group coverages.
Insuranceopedia explains Limited Policy
A limited policy can be part of your health, life, or other types of insurance policies. This insurance provides limited coverage for a very specific loss event and is much more restrictive to a general insurance policy which is much more inclusive.
Policies and coverages can vary between insurance companies and include specific blanket type coverages for only a few actual losses. These are sometimes found in group health and life contracts.
Insurance can often be costly when coverage is comprehensive. Policies that only pay in the event of certain occurrences as specified in the contract are often more cost-efficient to offer.
In the case of health insurance, this often means that the policy has low limits of what you can claim or limited ways to get coverage. For example, a limited policy will only pay if you are injured at work, while another will only pay if your injuries are extensive and recovery takes more than a specific amount of time.