What is Deductible in health insurance & why should you know about it?

A deductible quite simply is the amount that you will have to pay yourself towards medical treatment before the insurance company starts to cover the costs.

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What is Deductible and why should you know about it?

A deductible quite simply is the amount that you will have to pay yourself towards medical treatment before the insurance company starts to cover the costs.

Here’s an example: Let’s say you get treated at a hospital for a covered illness where your medical bill comes around to Rs. 1,00,000 and your policy contains a clause stating the deductible is Rs. 20,000.

In such a case, you will need to pay the first Rs. 20,000 of your medical expenses. Your insurance will then cover the other Rs. 80,000. However, if your expenses are less than Rs. 20,000, you will have to bear it on your own.

Why would anybody opt for deductibles?

Having a deductible reduces the premium amount payable on the policy. If you agree to pay a higher deductible amount, you will have to pay a lower premium every month. You can also decide the amount of deductible you want to pay if the policy doesn’t have a minimum deductible amount. Deductibles can either be a flat amount or a percentage of the total coverage amount and varies from policy to policy.

This works for many, as for small medical expenses, they don’t mind bearing the cost and would be perfectly comfortable to have insurance only when the expenses become high. Insurance is basically a safety net for avoiding financial distress for availing medical treatments, even if the higher amounts are covered that satisfies the requirements well enough.

Importance of deductibles in health insurance

*Some of the benefits of deductibles are: *

  • Deductibles prevent people from fining insurance claims irresponsibly, as they will also have to pay a part of the expense.
  • Having a deductible means that you will file fewer claims and be able to claim the No Claim bonus.
  • When you have a health insurance policy with a high deductible, you have to pay lower premiums, which will save you quite a bit of money in the long run.

The only cause for concern here is that you might have to bear the cost of any treatment equal to or lower than your deductible by yourself, so #ThinkAhead and ensure that you can do so.

Factors impacting the calculation of deductibles

There are certain factors the insurance company considers while fixing the deductible amount. These include:

  • Any pre-existing condition
  • Current health
  • Past medical conditions
  • Lifestyle
  • So, if you haven't bought your insurance, #ThinkAhead and see how much deductible you're okay paying. If you have, talk to your insurance provider and add it to your insurance before the new policy year starts.

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