Deductibles in a Health Insurance Plan

In health insurance, a deductible is a limit fixed by an insurer for the claim amount, which needs to be paid by the policyholder apart from the costs borne by the insurer. A deductible helps insurers against claims that are unacceptable.

When we go through a health insurance brochure, we often are met with many terms that we are unaware of and would require technical knowledge of insurance to actually understand it. But sometimes no matter how complex the term is, it is important to be aware of the meaning and related details so that you never end up with a product that you never wanted. One such term is ‘deductibles’. This word is often misconstrued, hence it is important that people are aware of this particular idea.

Deductible: Definition and Meaning

A deductible is a basically a limit that has been set by the company providing the insurance depicting the claim amount that policyholder has to foot for herself or himself prior to the company bearing rest of the cost. This deductible amount has to be paid by the policyholder every time a claim arises as well as any extra claim has to be cleared by the insurer.

Why the Need for Deductibles?

A deductible helps the insurance company to guard their interests against unreasonable and regular claims. The deductible amount discourages a policyholder for unrequired treatment. Of course this helps the insurer to avoid claims but it also helps prevent people coming up with trivial situations as well.

Types of Deductibles

There are two types of deductibles for health insurance policies:

  • Compulsory Deductibles: These deductibles are governed by the insurance policy as well as the insurance providing company, hence are mandatory.
  • Voluntary Deductibles: These deductibles can be opted in by the policyholder, often as a measure to reduce premium amounts.

Benefits of Deductibles in a Health Insurance Plan:

Though they might look like a burden, deductibles have their benefits. You have higher chances of gaining the No Claim Bonus as well as increasing cumulative bonuses since it keeps you from claiming for a few years. These bonuses help in the long run to increase the coverage amount.


  • The feature might prevent you from saving more your health insurance.
  • You may not have the finances to incur the deductible costs at emergencies which puts you in a very dicey place.

This is overall a part of a policy that must be noted because the lesser the deductible limit the better it is for the policyholder, when it comes to and not just the premium amount.

GST rate of 18% applicable for all financial services effective July 1, 2017.

Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.

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