Know All About Deductibles in Health Insurance

A Deductible is a vital component of health insurance policies. Yet, it is a concept which is not clearly understood by most. Whether you already have a health insurance plan or you are planning to buy one, it is important to understand deductibles as it has a significant impact on your premium and coverage. Here’s everything you need to know about health insurance deductibles: -

What Are Deductibles?

A deductible is a pre-determined amount which is deducted from the claim amount as per the terms and conditions of the policy. Consequently, the deductible would need to paid by the policyholder. However, many policyholders are under the false impression that the deductible reduces the sum insured of a health insurance plan, which is not true. In a nutshell, a deductible is an amount that a policyholder has to pay from his/her pocket before the insurance company settles the claim.

For instance, Rohan has purchased a health insurance policy which offers a sum insured of Rs. 50,000 and has a deductible of Rs 5000. If the hospital bill, amounts to Rs 50,000 the insurance company will only pay Rs 45,000, while the remaining 5000 will be paid by Rohan as deductible. On the other hand, if the hospital bill doesn’t exceed Rs 5000, the entire amount will have to be borne by Rohan, as that is his deductible limit.

Types of Deductibles

Deductibles can be broadly classified into two categories: -

Compulsory Deductible

As the name suggests, the compulsory deductible is an unavoidable charge. If your policy includes a compulsory deductible, your insurer expects you to pay the amount before the claim is settled. A compulsory deductible is added by the company as per their underwriting policies. However, the amount of deductible varies from company to company. Generally, the compulsory deductible can be anything between Rs.2000 to Rs.5000.

Voluntary Deductible

Certain insurance companies allow the policyholders to choose the amount of deductible as per their requirements. In other words, the voluntary deductible is the amount which a policyholder is willing to bear from the total medical cost. So the rest of the cost will be borne by the insurance company.

How Deductibles Affect Your Health Insurance Premium?

It is very important to understand the relationship between the deductible and the health insurance premium. Deductibles are inversely proportionate to your health insurance i.e. they will have the opposite effect on each other. If you choose a high deductible, you will be charged a low premium and vice versa. Hence, a deductible can be a blessing in disguise for a policyholder as it attracts lower premiums.

*premium Amount for Male, 35 yrs, 10 year term, Silver option, including tax.
HDFC Standard Life Insurance Company Limited.

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