There is no doubt that it is necessary to buy a health insurance policy amid rising medical expenses. At the same time, it is important to understand the various nuances of the insurance policy to take advantage of your plan.
When you buy a health insurance plan, there are a few ways to save on your premiums. One way is to choose a ‘deductible’ where the policyholder has to pay a fixed amount before the claim starts.
For example, when politics ₹3 lakh carries a deductible of ₹40,000 then at the time of making a claim the policy holder has to pay ₹40,000 before the insurer pays the amount.
This reduces the amount of premium for the policy holder. Experts believe that purchasing a deductible is economically wise for seniors because insurers tend to pay them higher premiums, and deductibles allow them to pay lower premiums.
“Deductibles are most effective for seniors over 60 because a small deductible can significantly reduce premiums. For those under 60, I recommend not having a deductible if possible,” he said. Kapil Mehta, Co-Founder and CEO of SecureNow Insurance Brokers.
Deductible vs co-payment clause
While the ‘deductible’ requires a fixed amount to be paid at the time of the insurance claim, there is another way to reduce the out-of-pocket amount, that is, through a co-payment clause. It differs from the deductible because the co-payment refers to a percentage of the out-of-pocket claim amount.
For example, if the co-payment is 10 percent, it means that when there is a demand for ₹5 lakh has been made – the policyholder has to cough up 10 per cent of the total amount, ie, ₹50,000. On the other hand, if there is a deductible – the owner of the policy will be made to pay a fixed amount, say ₹40,000 regardless of the claim amount.
The impact of each plan
It is important to note that when you have a deductible for a certain amount, you can claim your insurance only after the amount of your deductible is over. For example, if the ₹40,000 deductible – claim of ₹30,000 is not possible, but when the insurance claim is crossed ₹40,000,000,000,000,000.
Another disadvantage of choosing the deductible is that in order to save the premium – you spend money every time you make a claim. Also, if the deductible is high enough, it’s not worth spending a lot of money out of pocket – otherwise the claim won’t even start.
In such cases, it is considered more economically feasible to choose a co-payment clause that calculates out-of-pocket costs as a percentage of the total of demand, and decreases or increases in proportion to the total demand.
Therefore, before choosing a deductible or co-payment policy, it is very important to think about all the advantages and disadvantages.
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First published: December 28, 2022 at 08:17 IST