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Health Insurance Deductibles

By Finserv MARKETS - Feb 4,2019
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Deductible in Health Insurance

Health insurance can be a complex concept to understand, making it even more overwhelming for people to decide whether to buy the policy or not. In India, you need to be well versed with several health insurance clauses before purchasing the plan. One such clause that you should be aware of is the deductible.

In this section, we have discussed health insurance deductible in detail. Let us begin by understanding what a deductible is.

What is Deductible?

A deductible is nothing but the amount that you (the policyholder) are liable to pay before your insurer settles the claim. Below, we have explained what health insurance deductible is with an example. Here, take a look!

What is Health Insurance Deductible?

A deductible in health insurance is a limit set by the health insurance provider. It depicts that the insured needs to pay a part of the claim amount from their pocket, whereas the remaining shall be borne by the insurer.

For instance, if the deductible amount in your policy is Rs. 1 Lakh and the sum assured is Rs. 5 Lakh, in case of a claim of Rs. 50,000, you will have to pay the entire amount out of your pocket. However, if the claim amount is Rs. 2 Lakh, then you will have to pay Rs. 1 Lakh out of your pocket and the insurance company will pay the remaining Rs. 1 Lakh (which is the amount exceeding your deductible). The company will pay an amount, which is over and above the amount of deductible in the policy.

How Does Deductible in Health Insurance Work?

With a deductible clause in health insurance, you will be deterred from raising unnecessary claims on the policy. Because of this, you will be able to accumulate the No Claim Bonus (NCB) on your health insurance plan.

As you are liable to pay a part of the claim amount, you will refrain yourself or any other members covered under the policy to raise claims for minor medical expenses. And since the deductible amount is to be paid before the insurer settles the claim, you will ensure that you use the health insurance coverage only in times of dire need.

What is Deductible in Top-Up Health Insurance?

Insurers in India provide top-up health plans to enhance the coverage of the primary health insurance policy. Top-up health insurance comes in handy when covering expenses for prolonged sickness or sudden medical contingencies.

However, when it comes to deductibles, the top-up health insurance deductible is different. Let us understand deductible in top-up health insurance with an example:

Consider that you have a primary health insurance coverage of up to Rs. 5 Lakh and a top-up plan of Rs. 3 Lakh with Rs. 1 Lakh as deductible. Now, let’s assume that you are seeking treatment and the total medical expenses sum up to be Rs. 6 Lakh. In such a scenario, the insurer will settle Rs. 5 Lakh from your primary health insurance coverage and the remaining Rs. 1 Lakh from the top-up policy. However, if you happen to need medical attention in the future again, and the expenses sum up to Rs. 2 Lakh, then the insurer will cover Rs. 1 Lakh and you will be liable to pay the remaining amount.

Types of Deductible in Health Insurance

The following table gives an overview of the different types of deductible available on health insurance in India.

Types of Deductible in Health Insurance

Description

Compulsory Deductible

Here, the deductible amount is predetermined by the insurer and has to be paid by you (the policyholder) when a claim is raised.

Note that you cannot lower the deductible amount.

Voluntary Deductible

Here, you (the policyholder) choose the deductible amount. Make sure that you evaluate your finances before deciding on the deductible.

Note that the higher the deductible amount you choose, the lower will be your health insurance premium.

Comprehensive Deductible

A comprehensive deductible is not available in the Indian market. However, it acts as a single deductible keeps adding until you (the policyholder) pay the total amount towards your health plan.

Non- Comprehensive Deductible

A non-comprehensive deductible applies to your entire health insurance plan. It requires you to pay the amount upfront before your insurer pays for the specified medical expenses.

Cumulative Deductible

A cumulative deductible applies to family health insurance plans. The deductible amount applies to all the insured members. The total deductible amount is to be paid when a claim is raised.

Health Insurance Deductible Benefits

Here are a few benefits of health insurance deductibles –

  • It is one way to reduce your health insurance premiums. Plus, most insurers provide discounts when you opt for voluntary deductibles. So, check with your insurer for the same!

  • It deters you from raising a claim on your health insurance plan for minor expenses. Further, it helps accumulate the No Claim Bonus, which can be used to enhance the coverage of your health plan in the future.

Health Insurance Deductible Disadvantages

We have enlisted the drawbacks of health insurance deductibles below –

  • With deductibles, you will have to pay a part of the claim amount from your pocket before the insurer settles the remaining balance.

  • While you choose a higher deductible amount to reduce your health insurance premiums, keep in mind that you have to pay that amount whenever a claim is raised against the health policy. That means you have to keep the money ready in times of medical emergencies.

Copay and Deductible in Health Insurance

Often, people get confused about copay and deductible in health insurance. We have explained the difference between the two for your better understanding.

Copay in Health Insurance

Deductible in Health Insurance

A copay is a fixed/predetermined percentage that you (the policyholder) are liable to pay when a claim request is raised against your health insurance plan.

A deductible is a part of the claim amount that you (the policyholder) decide to pay willingly when buying the health insurance plan.

For instance, consider you purchased a health insurance plan with a copay clause of 10%. Now, if the claim amount is Rs. 50,000, then you are liable to pay Rs.5000 from your pocket.

For instance, consider that you opt Rs. 30,000 as a deductible amount on your health insurance plan. Now, if you raise a claim request for Rs. 50,000, then you are liable to pay Rs. 30,000 from the total claim amount.

So, every time a claim is raised against your health insurance plan, you have to pay the copay percentage.

When it comes to deductibles, you need to pay the amount before your insurer settles the claim.

How to Choose a Health Insurance Deductible?

Usually, people tend to choose a higher deductible amount to reduce health insurance premiums. However, it is wrong. The primary purpose of buying a health insurance plan is to have financial coverage during sudden medical emergencies.

Therefore, it is necessary to make an informed decision when it comes to choosing the coverage and deductible. If you choose to pay a higher deductible, then you have to cover that amount at the time of claim settlement. On the other hand, if you want your health insurance plan to cover most of the medical expenses, opt for a lower deductible. But it will increase your premium.

You can use the health insurance calculator to determine the premium charged and make an informed financial decision based on it.

Conclusion

You need to be aware of the deductibles in your policy and make a wise decision when buying health insurance in India. Be sure of the limits in case of the voluntary deductible so that you know what you are getting into before signing the document. Finserv MARKETS is your personal health insurance guide to get clarity on more such health insurance concepts and terminologies. Head to our website to get a free health policy quote today!

Also know about health insurance tax benefits before you buy the policy

Read our top blogs to know more about health insurance in India:

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