Health Insurance Deductible

One of the terms that can lead to some confusion when one is looking to buy a health insurance policy is "deductible”. Understanding how a deductible works can help you make substantial saving on the premium you pay for your policy.

At its core, a deductible is the amount you have to pay from your pocket towards healthcare charges before your insurance kicks in. For example, if you file a claim for expenses worth ₹15,000 and the deductible is ₹1,000 – you will have to pay ₹1,000 towards the healthcare costs and the insurer would pay the rest. The higher the deductible you take on, the lower will be the cost of your health insurance.

Types of deductibles
In the Indian insurance market, two types of health insurance deductibles come into play:

1.Compulsory deductible: With this kind of deductible, the policyholder has no choice and has to pay a part of the health insurance claim. IRDAI regulations have fixed the value of compulsory deductible and it does not have any impact on the insurance premium.

2.Voluntary deductible: A voluntary deductible is the amount that would have been paid by the insurer under usual conditions, but you selected to pay it out of your pocket. Choosing to have a voluntary deductible added to your insurance cover brings down your car insurance premium significantly. This is because the risk that the insurer is exposed to is lowered when the insured opts for voluntary deductible.

You will have to decide on how much you are willing to pay out of your pocket at the time of policy proposal itself. The deductible would be applied to every claim you file in the policy period. The insurer will only pay the part of the claim amount that is above the total voluntary and compulsory deductible.

Why are Deductibles Applied?

Insurers believe that deductibles make the policyholders more careful about their health. This is because some part of the healthcare cost will have to borne by the insured herself. Further, it discourages the insured from filing small claims, resulting in substantial savings in overhead costs.

Think of it like this: when a child first gets a cycle, the parents are worried about whether they would take care of the cycle. Some parents tell their child that a part of the cost of any repair the cycle needs will be cut from their pocket money. This makes the child act responsibly and ensure that the cycle stays in good condition as much as possible.

Things to Keep in Mind When Opting for Voluntary Deductible

Remember that a marginally higher premium could save you a lot of headache in case of an unforeseen accident. You do not want to worry about arranging money to pay your deductible amount when you may already be under considerable stress. Make sure you #ThinkAhead to determine what amount of deductible you can take on and opt for TATA AIG’s comprehensive health insurance plan to secure your (and your family’s) future.