What is Health Insurance Deductible?

Often people feel that even though they pay a hefty price towards buying a health insurance product and maintaining their coverage year-after-year, they still end up footing a considerable portion of their medical bills. This happens when the policyholder fails to take notice of the important terms and conditions of their policy. A deductible is one such critical aspect of health insurance policies which forms part of one’s outlay.Let us understand why it is important to consider health insurance deductible while buying a policy.

A deductible is an out-of-pocket cost in an insurance claim that one must pay before their insurance coverage comes into effect. In simpler words, the insurance providers are liable to pay the claim amount only when it exceeds the deductible figure. They only commit to cover the costs over and above the deductible amount.

if your policy states that its deductible is Rs. 10,000 and the claim amount is Rs. 1 lakh, then the policyholder is liable to shell out Rs. 10,000 while the balance 90,000 is the insurance provider’s liability.
On the other hand, if a policy mentions its deductible to be Rs. 15,000 and the medical bills eligible for a claim amount to be Rs. 13,500 then the policyholder shall be liable to settle the entire bill of Rs. 13,500.

Just like any other type of insurance plan , deductibles in health insurance also function in the same way. They are the part of medical expenses that a policyholder commits to pay from his or her own pocket before the policy coverage kicks in.

• Usually, lower the premium, higher the deductibles and vice versa. If you are able to fork out a substantial lump sum, then it is better to go for a plan with a higher deductible and lower premium. The savings made on lower premiums can be in turn ploughed back towards paying the deductible. This provides the policyholder with better control over the cost.
• Deductibles help insurance providers share the cost of claims with the policyholders. But why do insurance companies wish to undertake risk-sharing with the policy-holder when the policyholder already commits to paying regular premiums to keep the policy in force?
  Deductibles, essentially, discourage the insured person from availing treatments and hospitalizations just because the insurance company is being paid to cover the costs. This helps reduce the possibility of unjustified claims and the insured in turn benefits from No Claim Bonus.

When it comes to selecting a suitable health insurance policy , it is often challenging to align one’s requirements with their budget. There are a host of factors that need to be considered while buying a health insurance policy- deductibles being one such crucial feature.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.