Deductibles in Health Insurance Policies

 

A good health insurance provides protection against unforeseen events. Health insurance policies have become necessary across all age groups as the cover offered helps minimize financial loss and policyholders need not suffer a dent in their savings for any health exigencies.

Most health insurance policies elaborate on the coverage, sublimit etc. Deductible is another important feature of a health insurance policy.

A health insurance deductible is the amount a policyholder must bear in a health insurance claim. This means the insurance company will pay the claim amount only after the reducing the amount of deductible. Insurer pays only when the claimed amount exceeds the deductible. If the claimed amount is less than the deductible the policyholder has to bear the hospitalization expenses from his pocket. Let us learn more about deductibles on this blog.

Examples for deductibles for health insurance policies

1.     A has a health insurance policy with a sum insured of Rs 5 lakh and a deductible of Rs 30,000. He had to undergo surgery which will cost him Rs 1,00,000. Insurer will pay Rs 70,000 only and the policyholder will bear the deductible of Rs 30,000.

2.     In the second scenario the claimed amount is Rs 20000 for a minor ailment which required hospitalization. This amount is lower than the deductible of the policy hence insurer will not pay any amount towards the claim. Policyholder has to bear the entire expenses of this hospitalization.

Deductible in a top-up health insurance means that the basic policy will also cover a part of the expenses; the top-up plan will get activated only when the threshold limit is reached.

Sum insured of basic plan is Rs 5 lakh, top-up plan is Rs. 5 lakhs over and above the basic plan of Rs 5 lakhs. During hospitalization, if the medical expense is Rs 10 lakhs, the basic plan will pay Rs 5 lakhs and the top up plan pays Rs 5 lakhs.

 

Types of deductibles in health insurance

1. Compulsory deductible: Compulsory deductible is imposed by the insurer and this amount has to be borne by the policyholder in the event of a claim.

2. Voluntary deductible: These deductibles are opted voluntarily by the insured to reduce the premium. This is most suitable for the younger age band as the frequency of claim is less and premium can be substantially reduced The higher the deductible amount, the lower the policy's premium.

Important features of a deductible

Deductible is usually agreed upon at policy inception and at renewal of a health insurance policy. The higher the deductible, the lesser will be the health insurance premium.

This helps policyholders as small claims can be borne by them and thereby a cumulative bonus is earned which increases the sum insured free of cost and the premium will be reduced at the time of policy renewal for good claims experience.

Deductible helps the insurer too as the policyholder must bear the deductible before a claim. Policyholder also bears the responsibility of a claim and acts in prudent manner as the expenses are partially borne by him, the logic being that most insured persons can afford low expenses of visits, medications, etc. without suffering much pressure. Thus, maintaining a claims free policy attracts bonus and health checkups offers.

Need for deductibles

1. Reduce administrative costs for small claims- small claims take up the same administrative work as a large claim along with the time consumed in paying the claims.
2. Deductible in insurance is to prevent insureds from making false and fraudulent claims. Deductibles act as a deterrent to such practices and improve insured’s moral standards while lodging a claim.

 

Opting for a higher deductible helps the policyholder as money can be saved in insurance premiums. Health insurance policies with high deductibles are recommended for persons who do not have chronic illness and are in a younger age bracket. Lower deductible is for people with ailments and those who require frequent medical care. Factors such as health condition, age, frequency of filing claims, premium must be carefully considered before buying a health policy and choosing the right deductible.

 

We at Zen insurance assist in choosing the right Insurance cover to suit your needs. Please contact us for assistance.

 

Disclaimer:   

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.