Are you planning to buy insurance for your health, vehicle, or house? If so, then you must know about deductibles and how they function. The insurance deductible is prevalent across property, casualty, and health insurance products. Simply put, these are out-of-pocket expenses that you must pay before your insurance coverage takes effect and settles out on your claims.

The deductible value varies depending on the coverage, insurer, and premium amount. The basic rule is that if your insurance has a high deductible, you will pay lower monthly or annual rates since you are responsible for more expenditures before coverage begins. Higher premiums, on the other hand, are typically associated with lesser deductibles. In some circumstances, the insurance coverage kicks in considerably sooner.

What is Health Insurance Deductible?

In health insurance, the deductible is the maximum amount of expenses that can be incurred before the insurer would accept claims. Deductibles allow the insurer to avoid modest and frequent claims. This also protects against the moral hazard of utilising insurance indiscriminately.

For example, if you have INR 5 lakh health insurance with INR 5000 deductible, the insurer will accept claims that exceed this amount.

Thus, if you spend INR 10,000 on a covered medical service, you will pay INR 5000 while the insurance will pay the rest of INR 5000. However, if you just spend INR 4999 or INR even 5000, you would be liable for the total amount.

How Does Health Insurance Deductible Work?

When determining the health insurance premium, the insurance companies assess risks as well as the amount of money they will have to spend on healthcare services. Deductibles are included in health plans to reduce risks. It guarantees that policyholders take responsibility for modest claims. This also lowers the insurer's overall health insurance prices or costs.

The deductible is the amount you must pay before your health insurance coverage becomes effective. The smaller your health insurance premium, the larger your health insurance premium deduction. On the other hand, expensive policies come with lower deductibles. 

What are the Different Types of Deductibles in Health Insurance?

Compulsory and voluntary deductibles are the two categories of health insurance deductibles that are available in India. On the other hand, there are additional deductible options available in the international marketplace, such as non-comprehensive, cumulative, and comprehensive deductibles. We shall discuss each one of them briefly:

• Compulsory Deductible

This deductible amount is necessary for an insured individual and it is decided by the insurance company. The fixed or predefined amount specified here is required for the insured individual to pay when a claim is filed. This can be in the form of a percentage of the sum insured. In this type of deductible, the medical insurance premium is not lowered.

• Voluntary Deductible

A voluntary deductible is an amount that an insured decides to pay out of pocket if a claim arises. The decided amount may be determined by both financial affordability and the insured's medical expenditures. If the insured chooses a greater deductible, they will have to pay a lower health insurance premium, and vice versa. This deductible applies when the insured does not file claims frequently and prefers to pay a lower premium for their insurance plan. 

• Comprehensive Deductible

A single deductible accumulates until the policyholder pays the whole cost of their health insurance. This form of deductible in health insurance is applicable to all types of coverage. However, this form of deductible is presently not available in the Indian market. 

• Non-comprehensive Deductible

This deductible is only applicable to particular coverages and not the whole policy. To cover certain medical bills and treatment, the insured may be required to pay a portion of the cost before the insurer pays. 

• Cumulative Deductible

This deductible type applies only to family floater plans. This is mainly because, under cumulative deductibles, an insurance company applies the deductible on all members of the family. After the family meets the deductible limit, the insurer pays the balance claim amount.

Final Words

Insurance plans feature deductibles to make sure that all parties—the insurance company and its policyholders—share some of the expenses and policyholders have a stake in the outcome. Assuming all other variables remain the same, a policy with a low deductible—whether for health, house, or vehicle insurance—will often cost more than one with a high deductible. It pays to look around for insurance coverage to ensure that it fits both your demands and your budget, as is the case with any insurance.

The health insurance deductible is in place to protect the interests of insurance companies against individuals who submit few or no claims for their actual health plans. It stops policyholders from filing irrational claims and instead assists them in realising that they must use their insurance in urgent situations.  

Know More Here