What is a Deductible in Health Insurance?

Most people think that once they buy a health insurance policy, all their medical bills will be taken care of. But there is this one word in the policy document that often confuses many “deductibles”. If you understand what is deductible, you can avoid surprises during the claims and pick the plan that suits you best.

A deductible is just the amount you pay from your own pocket before your health insurance steps in to pay the rest. You can think of it as sharing the cost with your insurer. Once you pay your part, the insurance company will take care of the remaining expenses as per your policy.

Why do deductibles exist?

Deductibles are not there to trouble you. In fact, they have a few important benefits:

• Deductibles help you to pay a lower premium. If you are ready to handle a part of the medical cost yourself, your insurer will reward you with a more affordable premium.


• They also help prevent unnecessary or frequent claims. When you know you have to pay a small part yourself, you tend to be a bit more careful on hospitalizations and its expenses.


• Deductibles allow you to customise your policy as per your budget and your health needs.

How does a deductible work in real life?

Let’s say your health insurance policy has a deductible of ₹20,000. If you are hospitalised and your total bill is ₹1,00,000, you will pay the first ₹20,000. Then the insurance company will pay the remaining ₹80,000, as long as the treatment is covered by your policy. Deductibles are different from Co-Payment, a copayment is the percentage of the claim amount you must share every time you make a claim, regardless of the bill size.

If your hospital bill is less than your deductible, you will have to pay the full amount yourself and cannot make a claim.

Types of deductibles in health insurance

There are mainly two types:

1. Voluntary deductible
   This is an amount you choose yourself to lower your premium. The higher the voluntary deductible you pick, the less you pay for your policy. This is a good option if you are healthy, do not visit hospitals often, or want to save on your yearly insurance premium’s cost.


2. Compulsory deductible
   This is set by the insurer and cannot be changed. It usually applies to some specific plans. You have to pay this amount every time you make a claim.

Is choosing a deductible a good idea?

A deductible can be useful if:

• You want a lower premium.


• You are comfortable paying small medical expenses yourself.


• You have a good emergency fund.

A deductible may not be the best choice if you take medical care more often or you want your insurer to pay most of your expenses.

Final thoughts

A deductible is nothing to worry about. It is just a way to share costs that can help you save money on your premium and still give you solid financial protection during big medical emergencies. When you choose a health insurance policy, always check the deductible and make sure it fits your budget and health needs. A little understanding now can save you a lot of confusion and stress later.