What Are Deductibles in Health Insurance in India

Before buying a health insurance policy, it is important for you to understand all the aspects related to it. Ignoring such components of health insurance may cause several hindrances at the time of claim settlement. One such term that you may come across while purchasing a health policy is the insurance deductible.

To learn more about deductibles in health plans, read on and explore all about deductibles and how it helps in choosing an ideal health plan for you and your family.

What Are Deductibles?

A deductible is a fixed amount that is paid by the policyholders before the insurance company starts offering the coverage benefits in case of a claim. The time period wherein the deductible is paid is specified at the time of policy inception. If you wish to pay lower premiums, you can opt for higher deductibles as higher the deductible, the lower the premium and vice versa.

Let us understand the concept of deductibles in a better way with an example:

Suppose, Mr. A choose to pay a deductible of Rs. 10000/year. He gets sick and has to get hospitalized for the treatment, which will cost him around Rs.25000. In such situations, Rs. 10,000 will be paid under deductibles and rest will be payable by the insurance company.

Why do Insurance policies have Deductibles?

Deductibles prevent people from going for unnecessary treatments or hospitalizations and serve as a deterrent from raising small and trivial claims. With the deductible clause available in your health insurance policy, you will not file for minor claims. This clause is beneficial for you as well as for the insurer as when you avoid making unnecessary claims you can avail the No Claim Bonus Benefit, whereas, the insurer will need to only cover legitimate claims.

Types of Deductibles

In India, there are two types of deductibles in health insurance: Compulsory and Voluntary. Let’s read more about them:

• Compulsory Deductible

  A Compulsory deductible is a fixed amount that needs to be paid by the policyholder whenever he/she filed for a claim. For example, if the compulsory deductible is Rs. 10,000 and the treatment expenses incurred is Rs. 50,000, then in such case the insured is liable to pay Rs. 10,000 by himself and the rest of the amount that is Rs. 40,000 will be paid by the Insurance company.

  In short, the compulsory deductible is an amount which is fixed by the insurance company and the insured needs to pay the same whenever a claim arises.

• Voluntary Deductible

  In order to lower the premium amount, the insurance companies give an option to the policyholder to voluntarily choose the deductible amount. The deductible amount chosen by the policyholder often depends upon their financial affordability and medical expenses.

Benefits of Deductibles in Health Insurance

The following are the main advantages of deductibles in health insurance:

• Opting for deductibles helps to lower the cost of health insurance. Also, one may avail several discounts if they choose voluntary deductibles.
• It deters you from filing minor claims, which helps you earn No Claim Bonus (NCB), which may be used to enhance your primary health plan's coverage.
• Despite relevant deductibles, one can access health insurance coverage in the event of a medical emergency or unexpected hospitalization.

Disadvantages of Deductibles in Health Insurance:

While deductibles serve to reduce the cost of health insurance, they can have several disadvantages, such as:

• If you filed a claim for the amount less than the deductible, you will have to pay for medical bills, particularly if you lack the financial means to pay the bill, because a health insurance policy with a mandatory deductible will only pay once you have paid the deductible sum.
• You will have to pay out of pocket if your deductible is larger, which will deplete your savings, especially if you have several medical crises.

How is Deductible different from Co-payment?

The main difference between co-payments and deductibles is the amount that the policyholders have to pay. Deductibles are generally higher than co-pays but are paid only once a year. On the other hand, co-payments are ongoing. Policyholders have to pay each time they apply for a claim, no matter how many co-payments they have paid during the year. Also, co-payment is only a part of health insurance, but the deductible plays a part in health and general insurance.

Wrapping it up:

The choice of Deductible depends on your budget and medical requirements. It's true that going with a higher deductible will lower your premiums, however, you will have to pay for the medical expenses by yourselves until and unless you have exceeded the deductible limit. Health insurance provides financial protection in the event of a medical emergency. As a result, you must make an informed decision before selecting the appropriate coverage. You can choose a higher deductible if you can pay a higher amount out of pocket while raising the claim amount. If you want your insurance to cover the majority of your medical bills, choose a lower deductible.