Deductible for Health Insurance: Should it be High or Low?

Posted on: Feb 21, 2022 | | Written by:

Deductible for Health Insurance: Should it be High or Low?

Published on February 25, 2022. EST READ TIME: 3 minutes

Buying a health insurance cover in present times has become non-negotiable. Apart from the pandemic, there are multiple lifestyle diseases on the rise, and being prepared is the best way to protect your finances in an emergency. But buying a health plan means paying a certain premium too. And this premium amount shoots up when you go for a large sum insured. To reduce the premium, you can increase the deductible amount though. But is it a good move? Let’s discuss.

What’s deductible?

In a policy that doesn’t involve a deductible, you need to pay a certain premium that offers some benefits against a specified sum insured. Now, if you need greater coverage, you must spend more money on the premium to get it. The catch is, if you don’t fall sick during the policy period, the big amount gets wasted. Then again, if your sum insured is not enough, it can quickly get exhausted in medical expenses if the treatment goes on for a few days.

So, what to do? Well, insurers offer the option of a deductible. Deductible is the percentage of the sum insured that you need to pay upfront for the treatment before the policy coverage gets initiated. With a higher deductible limit, the risk factor for the insurer gets lowered and that helps you to get by with a smaller premium.

How is the situation different when the deductible is high or low?

For starters, you can choose a policy with no deductible at all. But if you feel like reducing your premium, you can either go for a lower or higher deductible. Let’s see the difference:

Health insurance cover with no or low deductible:

• It is ideal if you want a hassle-free claim process, preferably cashless.

• If you are willing to pay a higher premium, go for it.

• During hospitalisation, you don’t need to pay anything.

• Once the sum insured is reached, all expenses need to be borne by you, out of pocket.

• You can initiate the treatment without putting yourself under any financial pressure. The stress only comes when the sum insured proves to be insufficient.

Health insurance cover with high deductible:

• The policy premium that you pay is extremely affordable.

• You need to pay the amount up to a pre-determined percentage. Once the deductible is crossed, you can avail the benefits of the health insurance cover.

• Most critical illness or senior citizen plans are offered with higher deductibles to lower the risk of the insurer.

Which one should you opt for?

It’s simple. If you are someone who is more likely to get hospitalised for treatment or surgery due to your age or any pre-existing disease, you should opt for a health insurance cover with a low deductible. It is also ideal if you are expecting a baby or planning to bring home a new member soon. This plan charges a slightly higher premium, but it helps you save money at the time of claim settlement. During health emergencies, you don’t need to worry about cash in your account and can focus on the treatment.

Go for a health insurance coverwith a high deductible if you have little chance of getting sick. Maybe you are young and have good immunity and metabolism or you are someone who leads a healthy lifestyle focusing on a fitness regime and balanced diet. Your medical history is a good indicator of how likely you are to get sick. You should go for it if it isn’t a floater plan with your ageing parents or your children covered as part of the plan.

Conclusion

If you have the financial strength to afford a deductible and at the same time are less likely to get sick, go for a higher deductible. If not, opt for a lower deductible in order to enjoy health coverage from an early stage of the treatment. Many experts suggest that options like deductible and co-payment increase the liability of policyholders and when emotions are running high during the hospitalisation phase, a hassle-free health insurance cover works better. Also, in certain plans, the deductibles are mandated by the insurer. In those cases, if another insurer is willing to offer something better, the final decision is yours and you should make it based on your needs and income.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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