If you are entering the domain of health insurance for the first time, it is essential for you to know about the basic concepts for a better grasp of the scenario. One such aspect is called the deductible. During any claim settlement, the insured is required to spend a certain amount before the health insurance company begins to pay. This amount has technically termed the deductible.
During any claim settlement, the concerned insurance company is only liable to pay the excess amount that goes beyond the deductible limit. However, if your claim amount remains lower than the deductible, then the insurance company will settle all dues.
You must note that the premium for low deductible plans is comparatively more than those with high deductible limits.
The deductible clause in health insurance acts as a shield and prevents you from unnecessary medical expenditure or hospitalisation for any minor issues(s). Since the insured is required to share a part of the expenses incurred, they generally refrain from doing so, except for certain pressing circumstances.
Considering the Indian nature of health insurance, chiefly two types of deductibles are available here. These are known as voluntary deductibles and compulsory deductibles. However, considering the international scenario, you can find other varieties of deductibles too like cumulative deductibles, non-comprehensive deductibles, comprehensive deductibles, etc.
As the name suggests, the compulsory deductible is the amount that remains pre-determined by the concerned insurance company that the policyholder is liable to pay during any claim raise and settlement. If the compulsory deductible margin is set at INR 10000 and the hospital bill amounts to INR 40000, you have to pay INR 10000 and the insurance company will pay the remaining INR 30000. The compulsory deductible may also come in the form of a percentage of the total sum insured as per the discretion of the concerned insurance company. You must note that the premium value remains unaltered in case of compulsory deductible.
Unlike compulsory deductibles, the amount of voluntary deductible depends on the discretion of the policyholder. It is the amount that he/she decides to pay out of his/her own pocket during any claim settlement. The decision on this amount depends on the reasonability, income, and financial status of the policyholder. The standard rule is that if you opt for a higher amount deductible, you need to pay a comparatively lower amount of premium and vice versa.
If the insured decides to pay a voluntary deductible of INR 30000 and the claim amounts to INR 50000, then the company is liable to pay INR 20000.
The deductible option encourages not raising frequent claims and desires to pay a comparatively lesser premium amount. In this way, you will enjoy health coverage at a lower premium and need not pay anything else if no claim is raised.
The deductible option in any health plan acts as a potent deterrent to raising insignificant claims just for the sake of acquiring health insurance coverage. If a particular health plan possesses a high deductible amount it will automatically prohibit the insured from raising any claims since any minor expenses need to be borne by him/her. Moreover, not raising any claim will also not hamper the No Claim Bonus. Therefore, except for pressing medical exigencies, the insured will not try to raise any medical claims for minor issues, eventually rising the chances of rightful and necessary claims only.
Some of the major advantages of deductibles in health plans include:
Aids in the reduction of health plan premiums. Moreover, if the concerned insured chooses voluntary deductibles, depending on the terms and policies of the insurance company it may offer special discounts too.
The option of deductibles discourages the insured individual from raising minor claims, aiding to retain the No Claim Bonus amount undisturbed, thus enhancing the primary health plan coverage.
Despite the deductibles’ applicability, the insured individual can easily access health coverage during unprecedented medical contingencies.
Although the presence of deductibles reduces the health insurance premium value, it has certain disadvantages too:
The co-payment clause in health insurance is a pre-determined amount that the insured individual needs to pay each time while raising any claim or availing of any health insurance facility from any particular insurance company. It is a fixed amount or percentage that is mutually agreed upon between the insurer and the insured which has to be borne by the insured. The remaining claim amount is the liability of the insurer.
In a comparative study between co-payment and deductibles, the insured needs to pay the deductible before availing of the health insurance benefits during any claim raise. However, a co-payment needs to be paid each time you raise any claim.
While buying a health plan, it is not a safe and secure idea to choose an exorbitant deductible amount for a lower premium value. It is essential to make a sound and informed decision to make health insurance act as solid financial coverage. If you wish the insurance company to bear most of the medical costs, it is wise to choose a lower deductible and pay a higher premium.
This article highlights all the relevant aspects of deductibles in health insurance, their importance, and their working strategies. It is a very essential aspect to consider before deciding upon any particular health plan.
