We all know that health insurance covers financial costs associated with treating various illnesses. However, particular terms and conditions come into play during the time of claim filing and settlement. As a policyholder, it is vital that you be aware of these conditions to avoid stress later. One such important health insurance parameter is deductibles. This article explains what deductibles are and whether you should opt for a high or low deductible while buying health insurance.
What Are Deductibles?
In health insurance, a deductible is a sum of money you need to pay from your own pocket before making a claim. Deductibles can be voluntary, mandatory or cumulative.
- With mandatory deductibles, the insurance company sets a percentage of the sum insured as the deductible amount.
- Cumulative deductibles are typically common in family floater plans.
- A voluntary deductible lets you choose the deductible amount.
Based on your needs, you can keep the amount high or low.
High Deductible Vs Low Deductible
If you buy a health insurance policy with a high deductible, you need to pay a higher amount while filing a claim. Your insurance provider then pays the excess treatment costs.
Assume you have purchased a health insurance policy worth Rs 5 Lakh and set the deductible as Rs 1.5 Lakh. A heart surgery costs you Rs 4 Lakh. You need to pay Rs 1.5 Lakh from your pocket, after which your insurer pays the remaining amount.
As is apparent from the term ‘low deductible’, the amount you need to pay to make a claim is relatively lower, with low deductibles. Taking the above example, if your deductible were set at Rs 50,000, the insurer would have to pay Rs 3.5 Lakh.
High deductible vs low deductible - Features & Benefits
A high deductible means that the insurer’s risk and contribution are reduced. Therefore, the premium amount is low. Critical illnesses, cancer care policies, etc., typically have a higher deductible limit than regular plans.
With a low deductible health insurance plan, the insurer is accountable for making a more significant contribution. This risk is high; therefore, the insurance premiums are higher. However, low deductible plans reduce your financial burden as you need not worry about arranging excess funds.
High or Low Deductible - Which Is Better?
You can opt for a health insurance plan with a high deductible if the probability of you seeking medical assistance is low. This policy is also beneficial if you want high coverage without higher premiums. If you hold health insurance, the existing plan can cover the deductibles. This way, you can use the high deductible plan to pay for more expensive treatments.
However, if you do not mind paying higher premiums and have no existing health insurance plans, you can choose a low–deductible health insurance plan. The policy is helpful if you need to make frequent claims due to recurring illnesses.Buy Health Insurance
Medical treatments can get expensive, and your savings alone may not cover the costs. Be it high or low deductibles, a health insurance policy can help you ease the financial burden that comes with treating illnesses. Get health insurance now.Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.