What Are Health Insurance Deductibles?

The health insurance industry is full of jargon and confusing terms. One such jargon that you might encounter while looking for the right insurance policy for your family is Deductible. The deductible in a health insurance plan is a fixed amount that you have to pay out of your pocket when you raise an insurance claim and the rest of the amount is paid by the insurance company. Also, you can raise a claim only if your total medical/hospitalisation expenses exceed the deductible amount, otherwise, you do not get any benefit from the policy. 

How Do Health Insurance Deductibles work?

If your insurance policy has a deductible clause, you have to bear a certain portion of your medical expenses on your own before the insurance company pays for your expenses to the hospital. For example, if your insurance policy has a deductible of ₹5 lakhs and your total hospital expenses are ₹15 lakhs, you will have to pay ₹5 lakh to the hospital from your own pocket and the rest of ₹10 lakhs will be paid by the insurance company (provided the sum insured is at least ₹10 lakhs).

Types of Deductibles in Health Insurance Policies

There are mainly two types of deductibles that you will find in health insurance policies in India:

• Compulsory Deductible: If your insurance policy has a compulsory deductible, it means that you will have to pay a certain fixed amount (as mentioned in the policy wordings) to the hospital at the time of filing a claim and the rest of your medical expenses shall be taken care of by the insurance company (subject to the amount insured). Insurance policies with a compulsory deductible are sometimes also referred to as top-up or super top-up policies. This is because these policies are often clubbed with another policy with no deductible clause so that any expenses up to the amount deductible are paid by the main policy and thereafter the top-up/super top-up kicks in.
  
  
• Voluntary Deductible: Many insurance policies in India give you the option to pay a certain portion of your medical expenses from your own pocket at the time of processing the claim. In return, you get a discount on your future insurance premiums.

Advantages of Deductibles in Health Insurance

• Insurance policies with a deductible clause have a lower premium. The more the deductible amount, the less the premium.
  
• The deductible clause discourages the insured person from raising a claim even for small medical expenses for they can raise a claim only if the medical expenses exceed the deductible as stipulated in the policy wordings.

Disadvantages of Deductibles in Health Insurance

• The insured does not get any benefit from the insurance policy if the medical expenses are less than the deductible stipulated in the policy wordings.
  
• The insured always has to bear a certain portion of their medical expenses on their own.

Conclusion

Health insurance policies with an appropriate deductible clause can be a great choice as you get protection against heavy medical expenses with an affordable premium. Ideally, one should consider an insurance policy of a large sum insured with a deductible clause as a top-up and club it with another main policy with zero deductible. The amount insured for the main policy should be less, ideally, equal to the deductible of the top-up. This way you can get a complete health cover without paying a very high premium.