What is a per-incident limit versus a per-year limit?

• A. Per-incident is per day; per-year is per month.
• B. Per-incident applies to all family members; per-year applies to one person.
• C. Per-incident equals deductible; per-year equals premium.
• D. Per-incident limits pay up to a specified amount for a single event; per-year limits cap total payments within a policy year.

Answer: (D)

A per-incident limit caps how much the insurer will pay for a single medical event or claim. A per-year limit caps the total amount the insurer will pay for all claims within one policy year. So, for example, if the per-incident limit is set at a certain amount, that is the maximum the insurer will cover for that single incident, regardless of how many services or charges are involved. The per-year limit, on the other hand, controls the overall payout for all incidents in the year; once that annual cap is reached, no further benefits are paid for the rest of the year.

This distinction matters because a single costly event could be fully covered or only partially covered depending on the per-incident limit, while multiple smaller events could exhaust the annual limit even if each one individually seems modest. The other options aren’t accurate: per-incident isn’t defined as per day, per-year isn’t only for one person, and these limits are separate from deductibles and premiums.