We all know the importance of health insurance cover however while purchasing a health insurance policy understanding the technical jargons is a difficult task. Even though they are hard to understand, it is absolutely necessary to understand them as they define the terms of your Mediclaim policy.
Deductibles are one such technical jargon that all health insurance buyers must have knowledge about. There is no place for ignorance while investing money in a health insurance plan. Understanding the technicalities of a Mediclaim policy is a bliss as it will help in making a wise choice for yourself.
What is a “Deductible” in a Health Insurance Policy?
A deductible is a predetermined amount that an insured has to pay before the insurer starts paying for the rest of the cover. A deductible is that portion of money that an insured is bound to pay. A deductible can be expressed with an example as under:
You have a health insurance policy of INR 10 lakhs with a deductible of INR 50,000.
So, if there is a claim of INR 1.5 lakhs
| Claim for INR 1.5 lakhs | Health Insurance with Deductible of INR 50,000 | Health Insurance without Deductible |
| Pay out from pocket | INR 50,000 | 0 |
| Insurance Claim payable | INR 1,00,000 | INR 1,50,000 |
Then why Would Anyone Opt for a Deductible in a Health Insurance Plan?
A health plan with a deductible would cost much less than a health insurance policy without a deductible.
So, in our previous example, the premium for health insurance plan with a deductible of INR 50,000 would be lesser than the premium for the Health Insurance Plan without a deductible.
It also helps in reducing small claims since the initial amount needs to be paid by the insured.
How does a Deductible Work Under a Health Insurance Plan?
A deductible under the health insurance coverage is a predetermined amount that the insured needs to pay upfront. After paying the entire deductible amount the health insurance company starts bearing the medical expenses.
The health insurance companies introduced deductibles to put a tab on unnecessary claims. People tend to raise insurance claims for a small amount just because they have a health insurance cover. However, unnecessary claims can deter their chance of receiving No Claim Bonus.
Having a deductible clause under a health insurance policy will prompt the insured to raise a claim only in the event of a medical emergency i.e. when the claim amount is high. They would not raise a claim for minor medical expenses. Since the insured is prompted to pay the deductibles first, it eliminates all unnecessary claims thereby the health insurance companies honour rightful claims.
How does a Deductible Work Under a Top-up or a Super Top-up Health Insurance Policy?
A top-up or a super top-up health insurance plan is a facility provided by the health insurance companies wherein the insured can increase the sum insured. This top-up or the super top-up health insurance policy can be used to cover the insured himself and additional members of the family in order to provide additional cover to overcome unexpected medical contingencies. A top-up or a super top-up health insurance policy is very useful to increase the insurance coverage and it helps to keep base sum insured intact.
Under a top-up health insurance policy or a super top-up health insurance plan, the insured pays the deductible amount before any claim under a top-up plan is registered. So, when the cost of the medical treatment crosses the deductible amount then only the insured can file a claim under a top-up plan.
What are the Advantages and Disadvantages of Deductibles Under a Health Insurance Plan?
Advantages of Deductibles Under a Health Insurance Plan
Deductibles are an important aspect of a health insurance policy. The following are the primary benefits offered by deductibles under a health insurance plan
- Deductibles help in reducing the health insurance premium amount
- Deductibles is the reason for discouraging the insured from registering small claims thereby helping them to earn No Claim Bonus that helps in increasing the coverage of the primary health insurance policy
Disadvantages of Deductibles Under a Health Insurance Plan
The following are some disadvantages of deductibles under a health insurance plan
- The insured has to bear the initial medical expenses as it is compulsory to pay the entire share of deductibles before the insurance provider starts paying the rest of cover
- If an individual has opted for a higher deductible then they have to bear higher medical expenses initially from their own pocket which can create a dent on your savings.
Conclusion
Deductibles are a great tool to stop oneself from raising unnecessary claims and it is a way ahead towards earning No claim bonus which is a blessing as it increases the sum insured of your health insurance plan.
