Deductible In Health Insurance

A health insurance deductible is the proportion of the medical/hospitalisation expenses that you have to pay out of your pocket before you can make an insurance claim. The insurance company will pay the claim amount to you or directly to the hospital only when the deductible amount is paid.

In other words, the insurance company will only cover the claim if it is over and above the deductible amount. Any claim below the insurance deductible will be rejected.

The deductible amount is added as a clause in health insurance plans to ensure there are no frauds or scams and only genuine claims are raised by customers.

Here’s an example to understand an insurance deductible and how it works:

Consider a scenario where you have to undergo surgery that costs ₹1,20,000. In this case, you will be admitted to the hospital and will eventually raise a claim to cover the expenses of your treatment. However, your insurance policy has a deductible of ₹20,000. So, you will have to pay ₹20,000 out of your own pocket, and the insurance company will pay the remaining value of ₹1,00,000.

Now in another scenario, you have a minor procedure in the hospital that costs ₹15,000 only. Since this amount is less than the deductible amount of ₹20,000, you will have to bear the entire expenses, i.e., ₹15,000, on your own. You will not be able to raise a claim at all because the value of the claim is less than the deductible.

Now that you know what does deductible means, let’s find out why deductibles are important and how they can benefit you.

The insurance deductible can be decided on the basis of the following factors:

o Any pre-existing health conditions before you buy a health plan, such as diabetes, asthma, etc.
o Your current health status
o Your age
o Any past medical conditions or concerns
o Your present lifestyle and habits like smoking and drinking

There are three different types of health deductibles. You can choose any one of the following:

Voluntary deductible: A voluntary deductible is when the insured person can choose the deductible amount themselves. So, if you opt for this type, you will be able to select an insurance deductible amount that you can afford and are comfortable with. The decision can be made according to your income capacity and insurance needs. However, as explained above, the higher the premium amount, the lower can be your premium.

Compulsory deductible: A compulsory insurance deductible is fixed by the insurance company. You do not have a say in the insurance amount and have to abide by the rules set by the insurance provider. Since the compulsory deductible is fixed, it has no impact on the premium of your policy.

Cumulative deductible: A cumulative deductible is only applicable on family health insurance plans. Family floater plans cover all members of the family, such as the spouse, children, mother, and father. In such policies, the insurance cover is shared by all the people insured. The cumulative deductible is applied to such plans when an insurance claim is made by any person insured under the plan.

An insurance deductible can offer you many advantages. Here are some of them:

Insurance deductibles help you reduce your policy’s premium. If you opt for a high deductible amount, your monthly premium will be lowered. This can help you save a lot of money in the long run.

Insurance deductibles are a great way to minimise the frequency of claims. They not only work in favour of the insurance company but also benefit you. If you raise fewer claims, your insurance amount remains intact and can be utilised in your actual hour of need. Moreover, some companies offer discounts like the No Claim Bonus (NCB), which further helps in saving money when you renew your health policy.

The insurance deductible is often seen as a problematic feature in your health insurance plan, but it can benefit you in many ways. So, do not be afraid of this clause. However, you must pay attention to the type of deductible and see if it suits your purpose or not. The amount and type of deductible should be chosen after a careful evaluation of your insurance needs, probable medical expenses, and affordability.

For comprehensive health coverage for you and your family, check out the Medicare health insurance plans from Tata AIG. For a quote, you can visit our health insurance page or get in touch with us today.