Deductible: A health insurance term that you must know about

We all know and understand that health insurance is essential and most of us may even have one insuring ourselves and our families. But how many of us understand the nuances of the plan? 

When you buy a health plan or any insurance for that matter, it is essential to take time and read through the policy brochure and terms & conditions. There may be some terms that you may see very often in the product literature but not be familiar with. If you come across such terms, make sure to find out more about them and get clarity before you go ahead and purchase a plan. 

Today, we’re discussing a term in insurance known as Deductible.

Deductibles and how they work in health insurance

Deductible is referred to as a pre decided amount that you need to necessarily pay before the insurance company is liable to pay the claim amount. It is the fee that you need to pay towards costs of items that are not covered by insurance for non-payable items like, syringes, bandages, wheelchair usage, etc.

Once the deductible has been paid by the insured, the insurer continues to process the cashless or reimbursement claim as the case maybe. 

To help you understand the term better, here is an example of how deductibles in health insurance work:

For example – If your health insurance claim amount is Rs. 3,00,000 and your policy’s deductible amount is Rs. 50,000, then you pay Rs. 50,000 while the balance amount of Rs. 2,50,000 is paid by the health insurance company.

However, if your deductible is Rs. 50,000 and you run up a bill of Rs. 50,000 during hospitalisation, no claim amount will be payable to you, since the insurer will only pay for the claim amount that exceeds the deductible.

Having a deductible in your insurance policy acts as a preventive measure so that one does not file negligible and unnecessary claims. Also something to remember is that once you pay the deductible and have a very small amount in excess, it makes more sense to not raise a claim to avoid losing out on the No Claim Bonus (NCB). 

How does a deductible work in a top-up health insurance plan?

A top-up health insurance plan gives you added coverage over and above your primary health insurance plan. 

For example – Suppose the sum insured in a primary health insurance policy is Rs. 6 lakh and the top-up policy is Rs. 3 lakh with a deductible of Rs. 1 lakh. So, if the hospitalization bill amounts to a total of Rs. 7 lakh, the insurer will pay Rs. 6 lakh from the primary policy and the balance of Rs. 1 lakh will be paid from the top-up policy. 

In case of subsequent hospitalisation and the medical bill that amounts to Rs. 1 lakh, the policyholder must pay Rs. 1 lakh as deductible amount and the insurance company will pay the claim amount over and above the same. 

Deductible and co-pay: Know the difference

Many of you who know both the terms – deductible and co-pay would probably be faced with this question. To give you more clarity, health insurance plans can also have the factor of co-payment.

Co-payment is a way to participate in a health insurance plan and voluntarily opt to pay a certain percentage of the claim amount yourself so that your coverage remains intact but your premium amount can be reduced. This co-pay amount needs to be paid every time you raise a claim.

A deductible, on the other hand is the amount that we pay to avail healthcare benefits and once this is paid, the excess amount is paid by the insurer. 

We hope we have been able to help you better understand an important term. If you are looking to buy a health insurance plan and want to make an informed decision, check out the Bajaj Finserv App

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