What is High and Low Deductibles in Health Insurance? How to Choose the Best One?

Buying health insurance is one of the best investment decisions you could ever make. Like all other purchase decisions, buying the right health plan for yourself and your family depends on how well you understand important terms. This way, you can get the best health policy at an affordable premium. Here, the deductible is one component that impacts the premium you pay on your policy [1]. A high deductible amount lowers your premium and vice versa. However, both high and low health insurance deductibles have their pros and cons when it comes to health insurance. Read on to know more.

What is health insurance deductibles?

A deductible is the percentage of sum insured that you need to pay upfront during claim settlement before the insurer pays for your medical expenses [2]. In simpler terms, it is the part of the claim amount you need to pay from your pocket at the time of claim settlement. If you choose a higher deductible insurance plan, the premium you pay on it will decrease. On the other hand, opting for low deductible health insurance will require you to pay a higher premium. 

Compulsory deductible and voluntary deductible are types of deductibles. A compulsory deductible limit is usually set at 10% of the claim amount. For instance, you will need to pay a sum of Rs. 10,000 for a claim of Rs. 1,00,000 and the remaining will be taken care of by the insurer. A voluntary deductible can be set by you as per your choice. This gives you an option to either go for a high or low deductible. 

What is a high deductible in a health insurance plan?

Under such plans, the deductible you choose is set at a higher limit. This lowers the upfront premium you pay. You will have to bear the pre-determined percentage of deductible and your insurance company will only settle the claim when you exceed this limit. In case of claim settlement, your insurer will only cover the amount above the set deductible. 

With high health insurance deductibles, the risk reduces, therefore the premium amount is proportionately low. This allows you to choose a high sum insured to cover medical expenses. Doing so will ensure you get wide coverage benefits. On the flip side, you will have to incur a high amount as deductible during claim settlement. Such a policy may not be effective for smaller claims.

• Example

What is a low deductible in a health insurance plan?

A health insurance plan with a low deductible works similarly to a high deductible. The major difference is that the deductible limit set is lower and thus, the premium you pay is higher. When your claim exceeds the deductible percentage, the insurer will cover the remaining amount. 

This plan is ideal if you have recurring medical expenses or smaller claims. This way you don’t need to pay a high amount from your pocket to receive the benefit. On the other side, you have to pay higher premiums. These may prove expensive if you don’t make frequent claims.

• Example

Consider that you opt for a health plan with Rs.4 lakh as sum insured and a deductible amount of Rs. 20,000. If you make a claim for Rs.3 lakh, you will have to pay the deductible amount of Rs.20,000. Once you pay this, the insurer will cover the amount of Rs. 2.80 lakh as per the policy terms.

How to choose the right health insurance deductible plan?

The question that arises is whether you should opt for a high deductible or a low deductible. Both options have their pros and cons. The decision comes down to you based on your requirements and affordability. 

When should you opt for a high deductible health plan?

You can consider buying a health insurance policy with a high deductible under following circumstances:

• If you are young and healthy
• If you have an excellent medical history
• If you can manage a delayed health cover
• If it is difficult for you to pay a higher premium
• If you have no senior citizens covered in your health plan
• If you are not married or don’t have dependent children
• If you are not planning hospitalization or surgery any time soon
• If you need a higher coverage at low premium to cover against critical illnesses
• If you can pay a high deductible amount from your pocket during claim settlement
• If you already have an existing individual or group health insurance that can cover claims up to the deductible amount
• When should you opt for a low deductible health plan?

You should buy a health insurance policy with a low deductible in the following cases:

• If you have a senior citizen covered in your health plan
• If you have a preexisting disease or critical illness 
• If you incur recurring medical expenses
• If you can pay higher premiums
• If you are planning a major surgery in the future
• If you are planning a family or expecting the birth of a child
• If you or a family member requires frequent hospitalization
• If you don’t want to pay a high amount from your pocket during claim settlement

Based on this, you can choose the ideal health insurance plan. Consider the Aarogya Care Complete Health Solution Plans on Bajaj Finserv Health. With them, you can choose a budget-friendly way to tackle all your health needs from illness to wellness. These plans offer medical cover up to Rs.10 lakh, doctor consultation and lab test reimbursements, network discounts, zero co-payment, and more. For all these benefits, browse the variants and sign up today!