Deductible is the certain amount of money that a policy holder or an insured person has to pay before the insurance company starts paying up.
In simple word, all insurance companies are liable to pay the claim amount only when it crosses the deductible; as an example, if someone’s deductible of the policy is Rs. 30000 and the claim by the insured is Rs. 40000, then the insurance company is liable to pay only Rs. 10000.
So in any case, if the claim amount of the insured is lower than the deductible then the insurer will not be liable for paying any amount.
Reason of deductibles in health insurance: Deductibles are important in a health insurance plan as it prevent people from making unimportant claims or to have unnecessary treatment and hospitalization within an insurance cover.
In the high deductible policies, people have to pay a lower amount of premium that is a kind of saving for them as there are no unnecessary claims for small amounts but also a No Claim bonus.
Though the increased bonuses will increase the coverage amount in the long run but this deductible in insurance will provide zero benefit if the treatment costs do not cross the minimum specified deductible.
Co-pay clause in health insurance: On the other hand, a co-pay is a kind of fixed amount that the insured pays for a covered medical service and the insurer pays the rest of the amount. This co-pay amount depends on the nature of the treatment and medications and the co-pay clause is discouraged for people to make unnecessary claims. It not only reduces burden on the insurers but also acts as a deterrent.
So basically the need to have a deductible or co-pay insurance depends most on the different factors like present and past medical condition, lifestyle, pre-existing illness, good physical condition etc. an many more. That’s why insured should read the details fully before applying for any health insurance plan.