Having an insurance policy may not cover you entirely during a medical emergency. This is because of a mostly overlooked aspect of health insurance called deductibles. A health insurance deductible is the amount payable by the policyholder while raising a claim. This amount is predefined in the policy plan. For example, if you raise a claim of Rs 1 lakh and the deductible mentioned in the policy is Rs 40,000, the insurer will approve payment of Rs 60,000 only after adjusting the deductible amount. It is the amount that you need to pay before the insurer starts to pay against the claim. In other words, you must pay medical insurance deductibles out of your pocket.
What is deductible in health insurance?
Deductibles are included in health insurance policies to discourage policyholders from making trivial claims. This also ensures that people don’t misuse their health covers to avail of hospitalization for minor medical concerns.
How do deductibles work in health insurance?
The risk burden of the insurer reduces when there is a deductible amount in the health insurance policy. Therefore, health policies with high deductibles amount generally have a low insurance premium amount. If the amount of the deductible is low or non-existent, the premium amount will be higher.
Types of deductibles in health insurance
Common deductibles in medical insurance are:
- Policyholders can select voluntary deductibles amounts as per their budget and affordability. and decide their premium amount accordingly.
- A compulsory deductible is pre-decided by the insurer at the time of policy purchase. While buying a health policy with a compulsory deductible, the deductible becomes just another point in the list of policy terms and conditions. The compulsory deductible doesn’t have any impact on the premium amount.
- A cumulative deductible is applicable in family floater plans. In these policies, the insurance cover is a cumulative amount applicable to all the members of the family floater policy. Accordingly, the deductible amount is also applicable to all members cumulatively.
- A comprehensive deductible keeps on adding till you pay the amount applicable in your health policy. It is a single deductible that applies to all health covers, but it is not available in India at present.
- Non-comprehensive deductibles apply to specific parts of the policy and not the entire policy. Thus, it is deducted only when you raise a claim against such medical treatments to which the deductible is applicable. For any other claims, the deductibles clause is not triggered.
How to choose a deductible under your health insurance policy?
The applicability of the medical insurance deductibles and the payment terms are the two key factors that you must consider while buying a health cover. You must check the portions of the cover to which the deductible is applicable. Similarly, also find out the covers against which no deductible cover is required. For health deductibles payment, check how much you need to pay towards the health insurance deductibles and how often.
What is the difference between deductible vs co-payment in health insurance?
Co-payment is a predetermined and fixed amount paid by the policyholder each time a claim is made. While deductible is the amount that the policyholder pays before the insurer settles the claim, co-pay is a specific percentage of the claim that has to be paid by the policyholder. Nonetheless, both are expenses in the hands of the policyholder.
Factors impacting the deductible amount in health insurance policy
Several factors influence the deductible amount in your medical insurance policy:
- Age: Older individuals may face higher deductibles due to increased health risks.
- Health Status: Pre-existing conditions can lead to higher deductibles.
- Lifestyle Choices: Habits like smoking or excessive alcohol consumption may result in higher deductibles.
- Policy Type: Comprehensive plans might offer lower deductibles compared to basic coverage plans or critical illness insurance.
Why should you opt for an insurance deductible?
With deductibles, your propensity to raise claims is reduced, particularly the trivial ones. This protects your sum assured so that it can be used to the fullest if a significant medical emergency arrives. Raising no claims also earns you the No Claim Bonus, reducing your premium cost or considerably increasing your sum assured.
As mentioned earlier, the inclusion of a deductible also reduces your premium amount, so that you can buy a better health cover in the same budget.
One may note that the presence of deductibles means that you have to pay a portion of the hospital bill. In the case of smaller medical bills, you may end up paying most or all of it yourself. Nevertheless, medical insurance deductibles offer you the flexibility of rearranging your premium amount as per your affordability. A well-balanced health cover with your preferred deductible amount can safeguard you financially in your hour of need.
FAQs
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Can I change my deductible amount during the policy tenure?
Deductible amounts are set at the inception of the policy and cannot be changed mid-term. However, you can adjust the deductible when renewing your policy.
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Does a higher deductible affect claim settlements?
No, a higher deductible does not impact the claim settlement process but determines the portion of expenses you must pay before the insurer covers the remaining costs.
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Are deductibles applicable to all types of medical expenses?
Deductibles usually apply to most medical expenses, but some preventive services might be exempt. It's essential to review your policy details for specific information.
Conclusion
Deductibles in medical insurance are a major component that impacts premiums and the cost of the policy. Understanding how it works is important for properly managing medical expenses. Select a deductible that goes with your financial limits and medical needs. Most importantly, review the terms and conditions and stay in touch with the insurance advisor or customer care of the insurance company to make smart decisions for your health and finances.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis or treatment. Please consult a certified medical and/or nutrition professional for any questions. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.