Understanding deductibles in health insurance - Everything you need to know

Every young Indian understands the importance of health insurance. Without a policy, a trip to the hospital could put a massive dent in your savings and finances. Unfortunately, some people struggle to understand many health insurance terms and conditions, so they refrain from buying a policy. We want to help you make informed decisions about your finances and insurance. Here’s everything you need to know about the types of deductibles in health insurance policies.

A deductible is an initial amount that policyholders are responsible for paying out of pocket before the insurance company covers the remaining medical expenses. It is a fixed amount that the policyholder must pay for eligible medical costs before the insurance coverage kicks in. Deductibles are an essential part of health insurance policies and play a role in determining the cost and benefits of the plan. We can better answer the question of what is deductible in health insurance with an example.

Suppose you have a health insurance policy with a deductible of INR 40,000. You incur medical expenses of INR 1,50,000 after an accident. Once you pay INR 40,000, the insurance company will help pay the remaining INR 1,10,000.

You may have a different type of deductible depending on the kind of health insurance policy you select. Let’s better understand the various deductibles in India:

Some insurance companies fix the minimum deductible amount policyholders must pay. The compulsory amount does not change, so it does not impact the policy premium.

Some insurance companies allow policyholders to choose the deductible amount instead. Many policyholders opt for a higher deductible than the mandatory amount. Often, people opt for high voluntary deductibles to enjoy lower health insurance premiums. However, you should only select a high deductible if you are financially secure and can afford to pay the amount after hospitalisation.

Cumulative deductibles only work with family floater plans. Since the plan covers multiple individuals under a single policy, a cumulative deductible gets applied to them. Whenever a covered family member files a claim, the deductible applies.

Insurance companies use deductibles to prevent people from filing trivial or false claims. Since policyholders have to contribute an amount to each claim, they are unlikely to file small claims. Additionally, insurance companies allow policyholders to choose a higher deductible in exchange for premium benefits. For example, an insurance company may have a mandatory deductible of INR 5,000 or 5% of each claim amount. Policyholders can increase the deductible to INR 10,000 or 10% of each claim amount. The insurance company may offer a lower premium for their policy if they volunteer to contribute more to each claim.

Also Read: Understanding Comprehensive Health Insurance

While selecting a health insurance policy, you must consider your deductible options. Before you choose, you should evaluate the following factors:

Consider how much you can pay in a medical emergency. If you do not have savings you can count on, choose the minimum mandatory deductible option. Opting for a higher deductible could cause financial stress during a difficult time.

Honestly evaluate your health. If you’re dealing with chronic issues that require frequent hospital visits, a lower deductible could be more suitable. You should also consider your family’s medical history. You could be pre-disposed to developing issues such as heart ailments, hypertension or diabetes in the future. Consider the cost of treating them before choosing your deductible.

Purchasing a health policy helps you better plan your finances for the future. You don’t have to worry about the cost of medical emergencies since you already know the premium and deductible you have to pay. Health insurance plans provide financial coverage during stressful times. They also offer certain income tax deductions. You can claim a health insurance deduction in income tax under Section 80D of the Income Tax Act, 1961. Depending on the age of the insured individuals, you can claim deductions between INR 25,000 to INR 75,000 each year.

You may purchase a health plan when you’re young and may not have the finances to opt for a high deductible. Over time, your financial situation could change. You should review your deductible whenever you renew your health insurance policy. If your medical needs have changed, you should adjust your deductible accordingly.

Deductibles are an integral part of health insurance policies. Understanding how they work helps you make informed decisions about your insurance plan. Consider purchasing a health policy today if you don’t have one already. Visit the Zuno website to browse available options and find one that meets your needs. You can select high coverage and customise your policy with our add-ons. Choosing the right health plan can provide financial security and peace of mind.

ARN: Zuno/Blog/0623/14.                                                                                             All rights reserved.