Selecting a health insurance plan can be a perplexing choice due to the various jargons used. However, these terms are critical in determining the coverage of your policy and its ultimate purchase decision. Often you might have come across being required to share the treatment cost. It is known as deductibles.  Let us understand more about deductibles under health insurance.

What is a deductible?

A deductible is that amount which you, the policyholder need to pay before the health insurance cover kicks in. You need to pay this amount before your insurer covers the balance treatment cost. It implies, the insurer is bound contractually to pay for the specified costs once you cross the deductible of your policy. The advantage of a deductible is that you can modify the premium using this component, i.e. higher the deductible, lower is the premium and vice versa.

How does deductible work?

Deductibles discourage making claims for small and unnecessary amounts. There are quite a few cases where one may resort to making an insurance claim but since you require to pay a specified portion at first, it acts as a deterrent for all those claims of a nominal amount. Further, it also helps you preserve the cumulative or no-claim bonus.

What are the types of deductibles?

Deductibles for various health insurance plans for family, individual or any other cover are primarily of two types – compulsory or voluntary.

Compulsory deductible: It is the mandatory deductible that is governed by the insurer. Every time a claim is made, you are required to pay the compulsory deductible. Say, for example, your medical bill comes up to ₹60,000 and the compulsory deductible as per your policy’s terms is set at ₹15,000, you shall be required to pay this amount upfront after which the balance amount shall be paid by your insurance company. This amount of compulsory deductible can also be as a percentage of the sum assured.

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Voluntary deductible: Contrary to the compulsory deductible, it is an optional amount of deductible that can be opted. It is generally opted to keep a check on the premium. It is advisable to go for a voluntary deductible if you are healthy and do not require frequent medical aid as it reduces the amount of financial assistance from the insurance company. Suppose you have opted for a voluntary deductible of ₹1.5 lakhs and the medical expenses come to ₹4 lakhs, you shall be required to pay ₹1.5 lakhs and the balance can be claimed under your policy. Striking the right balance of voluntary deductible and your financial needs is essential as it can be a burden at the time of claim.

What are the benefits of deductibles?

Deductibles are useful to reduce your premium amount using the voluntary deductible option. Further, some insurers may also offer discounts if you opt for a voluntary deductible.

It discourages you from making claims for smaller hospital expenses. Also, in turn, helps in protecting the cumulative or no-claim bonus. It makes health insurance facilities accessible to individuals on a tight budget by helping them lower the premium.

To conclude, these are some ways in which you can make an informed choice when selecting the deductible for your policy. Also,  a health insurance premium calculator is a nifty tool that can further help to estimate the impact of deductibles on your premium. Hence, take the right step and balance the coverage and premium of your health insurance policy.


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