What is Deductible in Medical Insurance?

Medical Insurance helps you pay for hospital bills and other health expenses. However, before your insurance company pays, you have to cover a certain amount yourself. This amount is called a deductible. Let us understand how it works in simple words.

What is a Deductible?

A deductible is the money you must pay before your insurance starts covering medical costs. It is a fixed amount, not a percentage.
If your deductible is Rs. 5,000, you must pay Rs. 5,000 first. After that, your insurer will help you with the remaining bills.

How Does a Deductible Work?

Imagine you visit the hospital, and the total bill is Rs. 20,000. If your deductible is Rs. 5,000, you must pay that first. Then, your insurance will cover the rest according to your policy rules.

Some policies also include co-payments or co-insurance. These are extra amounts you may have to pay even after the deductible is met.

What are the Different Types of Deductibles?

There are different types of deductibles; among them the two main types of deductibles are:

1.Compulsory Deductibles

A compulsory deductible is a fixed amount you must pay before your insurance covers the costs. It is set by the insurance company and cannot be changed. Every policyholder has to pay this amount. This helps keep insurance affordable by making sure everyone shares some medical expenses before getting coverage.

2.Voluntary Deductibles

A voluntary deductible is an extra amount you choose to pay along with the compulsory deductible. If you agree to a higher voluntary deductible, your monthly premium becomes lower. This is helpful if you do not visit the doctor often and want to save on insurance costs while still having coverage.

Some other types of deductibles are:

Comprehensive Deductibles: Applies to all medical expenses in a policy. You must pay this amount first before your insurance covers any cost, no matter what the treatment is.
Non-Comprehensive Deductibles: Applies only to specific medical expenses. You pay this amount for certain treatments, while other costs might be covered by insurance without needing to meet the deductible.
Cumulative Deductibles: This is used in family insurance plans. All family members' medical expenses add up toward one deductible amount. Once reached, the insurance starts covering costs for the entire family.

What is the Need for Deductibles?

Deductibles help keep insurance costs balanced by discouraging policyholders from filing minor claims. This reduces the number of claims and ensures that they are genuine. If insurance covers all expenses from the start, monthly premiums will be very high. A deductible ensures policyholders share some costs, which helps keep premiums lower.

What are the Advantages of Deductibles?

Deductibles offer several advantages that make health insurance more beneficial. Some of the benefits include:

Lower Premium Costs: Higher deductibles reduce your monthly premium, making insurance more affordable.
Encourages Smart Spending: You avoid making small claims and save your insurance for major medical expenses.
No Claim Bonus Benefits: Some policies offer a No Claim Bonus, rewarding policyholders who avoid frequent claims by increasing their coverage amount over time.
Better Financial Planning: You can balance your medical costs and insurance benefits based on your health and budget.
Affordable Insurance Plans: Policies with deductibles often have lower overall costs, making quality healthcare coverage easier to manage.

How to Choose the Right Deductible?

The factors you must consider while choosing the right deductible for you are:

Understand Your Health Needs: If you visit the doctor often, choose a lower deductible. If you are generally healthy, a higher deductible can help reduce your premium.
Check Your Budget: Pick a deductible amount that you can afford to pay in case of sudden medical expenses.
Compare Insurance Plans: Some plans offer lower premiums with higher deductibles, while others have higher premiums with lower deductibles. Choose what suits you best.
Consider No Claim Bonus: If you rarely make claims, a higher deductible can help you earn a bonus, increasing your coverage amount.
Long-Term Benefits: If you want to save on monthly premiums and can handle higher upfront costs, a higher deductible might be a better option.

Choosing the right deductible based on your health needs and budget can help you make informed decisions about medical insurance.