What is Deductible in Health Insurance Policy?
When you buy a health insurance policy, you need to be aware of certain jargons and terminologies that have an impact on the policy. One of them is an insurance deductible. You need to understand what it is and how it works.
What is a health insurance deductible?
As the name suggests, a deductible is an amount, which you pay towards the medical expenses before an insurance company pays its share. The deductible has a strong impact on your policy and you need to be aware of it well in advance. For example, you have an insurance plan with a deductible of INR 3 lakh. After a medical illness, your hospital bill amounts to INR 8 lakh. You will have to pay the first INR 3 lakh out of your pocket. The benefits of your health insurance plan will only begin after you pay INR 3 lakh independently. This means that the deductible amount will have to be borne by you and the balance will be paid by your insurance company.
The purpose of an insurance deductible is to keep the premium amount low through cost sharing. Additionally, a deductible helps to reduce the number of smaller claims and unnecessary visits to the doctor. Many times, an insurance company has to face small claims from customers and a deductible helps them avoid the same. People who have a health plan with deductibles are less likely to go to the doctor for a small illness or injury.
When you buy health insurance, you will have to understand the amount of deductible on the policy. It will be explained in the terms and conditions of the contract, as well as, on the declaration page of the policy. However, if you are unsure where to find it or what it is, contact the insurance company representative and ask them about it. You can also ask them if there are different deductibles in case of critical health insurance.
Who decides the amount of deductible?
Since you are buying the policy, you will get to choose the amount of deductible. If you agree for a higher deductible, your premium cost will be low and vice-versa. You can consider deductibles as self-insurance, as you have agreed to pay this amount for the policy. A high deductible means you are willing to cover a high amount of risk through the deductible, which signifies that there is less risk for the insurance company. It will reduce their cost. Similarly, a low deductible means the company will have to bear a high risk and you will cover for low risk. The cost of insurance, in this case, will be on the higher side.
Consider your current financial health and medical condition before you buy a health insurance plan. Ask for health insurance quotes from different insurance companies in the market and then make a buying decision. You can also compare the quotes online and choose a plan that best fits your health and financial requirements.