Health insurance is an essential aspect of financial planning. It provides financial security in times of medical emergencies. However, understanding health insurance can be daunting, especially when it comes to terms like deductibles. A deductible is a unique feature that exists in most health insurance plans. It refers to the amount of money the policyholder must pay out of their own pocket before the insurance policy kicks in. It is a form of cost-sharing between the policyholder and the insurance company.
Know more about deductibles, their types, benefits, and considerations when choosing health insurance with deductibles in this comprehensive guide.
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What are the deductibles in health insurance?
A deductible in health insurance is the fixed amount you must pay out of pocket before your insurance provider starts covering expenses. For example, if your deductible is Rs.10,000, you’ll need to pay this amount before your policy benefits kick in. Deductibles help reduce premium costs but can increase your initial medical expenses. They can be compulsory or voluntary, affecting how much you save on premiums. Choosing the right deductible balance is essential for managing healthcare costs effectively.
What is a deductible in top-up health insurance?
Top-up health insurance is an additional coverage that policyholders can purchase to enhance their existing health insurance plan. In this context, the deductible in top-up health insurance functions similarly to regular health insurance deductibles. The insured must cover this predetermined amount before the top-up policy provides additional coverage.
Why health insurance deductibles are needed?
A health insurance deductible helps reduce premium costs by shifting some initial medical expenses to the policyholder. It discourages unnecessary claims and ensures responsible usage of health insurance benefits. Higher deductibles generally lead to lower premiums, making insurance more cost-effective. Choosing the right deductible ensures financial security while managing healthcare expenses wisely.
Types of deductibles in health insurance
Here are different types of deductibles in health insurance.
Individual deductible:
The amount that an individual policyholder must pay before the insurance coverage becomes active.
Family deductible:
The cumulative amount that a family must pay, often with a cap per individual, before the insurance coverage begins for any family member.
Per admission deductible:
Applicable for every hospital admission, this type of deductible ensures that the insured pays a fixed amount for each hospitalisation event.
Annual deductible:
The deductible amount that resets on an annual basis. Policyholders need to fulfil this amount each year before the insurance coverage takes effect.
Difference between deductible and co-pay clause in health insurance
Both, deductible in health insurance and co-pay clauses involve the policyholder paying out of pocket for their medical expenses. However, they differ in the types of costs that they cover.
Criteria |
Deductible |
Co-pay |
Definition |
Fixed amount paid by the insured before the insurance coverage begins. |
Percentage of medical expenses paid by the insured even after the deductible is met. |
Timing of Payment |
Paid upfront before the insurance coverage starts. |
Paid at the time of availing medical services. |
Reset period |
Can be annual or per admission, depending on the policy. |
Generally applicable per claim or per policy year. |
Relationship to premium |
Higher deductibles often result in lower premium costs. |
Does not directly impact premium costs but coverage amount. |
