Investing in a Health Insurance Policy? Here’s All You Need to Know About Health Insurance Deductible

Health insurance protects you from unexpected medical emergencies that could burn a hole in your pockets. It also helps you focus your time and energy on the treatment rather than worry about payment of bills. A health insurance policy is essentially a deal struck between the insurer and the insured, that protection from risk will be afforded so long as the risk is paid for to a certain extent. That amount you pay for the risk is called a health insurance deductible.

A health insurance deductible can be defined as the amount paid towards an insurance coverage before the insurer pays. In simpler terms, it is how much you will pay towards an insurance policy before claiming it. The insurer has to pay when the claim you make exceeds the health insurance deductible. For example: say your health insurance deductible is Rs. 6,000 and your policy coverage is Rs. 20,000. Then, the insurer is liable to pay Rs. 14,000 i.e., Rs. 20,000 – Rs. 6,000 only.

A health insurance deductible plays a very significant role in the insurance sector. It ensures that policy holder do not make frivolous insurance claims. It helps the insured truly understand the purpose of health insurance covers and only make genuine claims. This is a measure that will check any fraudulent or malafide claims that may be made. In fact, India reports a very large number of fraudulent insurance claims. Studies reveal that 8.5% of the premiums collected are lost to fraudulent claims annually. This amounts to about a whopping $6 billion, making health insurance deductibles all the more a necessity.

The quantum of health insurance deductible is a choice that the insurer makes. The higher the deductible, the lesser the risk for the insurer and the lesser the cost of health insurance policy. The terms and conditions of your health insurance policy will contain the quantum of deductible. Your policy will also specify the type of health insurance deductible that is applicable to you. There are four different types of health insurance deductibles offered by premium insurance service providers like Care Insurance. They are as given below:

1. Compulsory health insurance deductible

This is the health insurance deductible that the insured has to compulsorily pay when they buy a health insurance policy. In other words, it is the amount that all insured will have to pay at the time of settlement of insurance of claim. The amount of compulsory deductible does not have any effect on the premium, and it will remain the same. The quantum of deductible here is set by the insurer and not the insured, or policy holder.

2. Voluntary health insurance deductible

This is the health insurance deductible which is chosen by the insured or the policy holder, to pay at the time of settlement of insurance claim. This amount is voluntarily chosen by the insured, hence the name voluntary deductible. The quantum of voluntary deductible has an inverse relation with the premium paid, i.e., higher the deductible, lower the premium. This is most suited for policy holders who do not make frequent insurance claims and do not wish to pay higher premiums towards coverage.

3. Comprehensive health insurance deductible

A comprehensive health insurance deductible is applicable across multiple health insurance covers. Policy holders in India now have the option of adding multiple insurance covers to their existing general health insurance policy. Given this, it is most convenient to opt for a single deductible that will apply across all the covers added to the general insurance plan. There is a maximum limit for the comprehensive deductible applicable for multiple covers.

4. Non-comprehensive health insurance deductible

Non-comprehensive health insurance deductible is that which is applicable to one specific cover when a policy holder has multiple covers under their general health insurance. This is payable only before making a claim for a specific cover.