Your Money: Opt for deductibles to trim premium

financialexpress.com:

By Siddharth Singhal

While many realise the need to buy a health insurance policy, they also seek ways to save on the cost of premiums. Insurers offer several means to reduce the cost of health insurance for customers. One of those ways is deductibles. If you need to trim down your premium without jeopardising your coverage, the wiser approach is to consider opting for a deductible within your personal health insurance plan.

A deductible is a particular sum that policyholders need to pay before their insurance plan starts covering medical costs. For instance, if the deductible amount of your health plan is Rs 1 lakh and you file a claim of Rs 10 lakh, your insurer will cover your bill for Rs 9 lakh and the rest shall be borne by you.

To quote another situation, let’s say you file a health insurance claim of Rs 90,000. Your health insurer is not required to pay anything in this case because your bill is lower than your deductible amount. As the customer is required to pay a predetermined out-of-pocket expense known as a deductible, this naturally reduces the annual premium, making it more cost-effective.

Consumers often get confused between deductible and co-payment as both require them to pay out of pocket during the claim process. However, both are different. In co-payment, policyholders need to bear a portion of medical expenses and the insurer will cover the rest of the amount at the time of claim. For instance, if you opt for a 20% co-payment in your health insurance plan, and file a claim of Rs 10 lakh, then you have to pay Rs 2 lakh and the remaining amount of Rs 8 lakh will be covered by the insurer. By opting for co-payment, policyholders’ contribution in paying claims rise in tandem with the medical bill.

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