Following the COVID-19 outbreak, premiums for almost 52% of medical insurance policyholders increased by 25% in just 12 months. This figure indicates that healthcare services and health insurance are becoming increasingly expensive, prompting many to opt for high-deductible policies. However, many people still struggle to choose the right health insurance plan for their specific needs.
Saloni Shahi, a 30-year-old IT professional from Bangalore, decided to purchase medical insurance. She chose a plan with a high deductible, thinking she rarely fell ill, and of course, the low premium seemed attractive. However, an unexpected surgery costing ₹4 lakh meant she had to pay ₹3 lakh upfront before insurance coverage kicked in.
This is not the case just with Saloni. Many of us remain confused about the differences between High-Deductible and Low-Deductible plans. While one offers an affordable premium, the other has enhanced coverage. Let’s understand the fundamentals of deductibles in health insurance in detail, which can help you make an informed decision while purchasing medical insurance.
What is Deductible in Medical Insurance?: An Overview
In a nutshell, a deductible is simply the amount in your hospital bill that you have to pay out of your own pocket before the insurance steps in to cover the remaining bill. The deductible is predetermined when you buy the policy and remains the same regardless of your medical bills.
Imagine the case of Saloni Shahi. Her deductible amount was predetermined to be ₹3 lakhs. In her situation, the insurer would offer coverage only for the remaining ₹1 lakh out of the total ₹4 lakh medical bill.
Remember that a deductible and a copayment are not the same. Copayment is the amount you share with your insurer when paying the hospital bill, and it applies every time you raise a claim. In contrast, a deductible is a predetermined fixed amount you must pay before making a claim.
High Deductible Plans: Why Do They Work?
High deductible health insurance plans have their own set of benefits that make them widely popular among policyholders. Here’s why high deductible works:
1. Affordable Premium
One of the most striking features of this type of health insurance policy is that they have an affordable premium. This is simply because you are agreeing to pay a significant chunk out of your own pocket; the insurance company does not charge a high premium, making high deductible plans affordable and cost-effective.
2. Suitable for Healthy Individuals
A high deductible medical insurance plan is considered suitable for healthy individuals who enjoy physical well-being, rarely fall ill, maintain a healthy lifestyle, and have a sound medical history. Low-risk individuals are less likely to make claims and pay medical bills out of pocket to meet the deductible.
Here are some pros and cons of high deductible medical insurance policies that you must be mindful of:
Pros
1. The premiums under such policies are lower.
2. These policies are ideal for healthy individuals.
3. Such policies encourage individuals to take good care of their health.
4. These policies are suitable for individuals who are looking to purchase medical insurance only for emergencies.
Cons
1. There is always a risk of high out-of-pocket expenses during hospitalisation.
2. These policies are not considered suitable for individuals who are beyond a certain age, are dealing with a critical illness or have frequent medical needs.
3. These policies do not offer the vast convenience of cashless claim settlement.
Why You Should Choose Low Deductible Plans?
Medical insurance policies by Generali Central with low or zero deductibles have several benefits that encourage many individuals to go for these policies. These policies are ideal for individuals who are suffering from critical illnesses or have frequent medical needs. High-risk individuals can benefit significantly from plans with low deductibles because of their high chances of annual check-ups, treatments, medications or even hospitalisation.
Here are some pros and cons of medical insurance with a low deductible:
Pros
1. Financial protection against medical expenses, as the out-of-pocket expenses are significantly lower.
2. These policies offer peace of mind knowing that you and your family's medical needs are protected.
3. These policies are highly beneficial for individuals at high risk.
Cons
1. The premiums under these policies are higher compared to high-deductible medical insurance.
2. It might feel like a financial burden for low-income individuals.
Low Vs High Deductible in Health Insurance: Striking a Balance
In today's time, when health insurance in India offers multiple features, the right approach is not an either-or decision, but rather striking a balance between your options. To give you an idea, here’s when both these kinds of policies work:
1. High Deductible Medical Insurance
A high-deductible medical insurance policy is considered a reliable option for low-risk individuals seeking affordable medical coverage. These policies also serve as an effective additional medical insurance for emergencies.
2. Low Deductible Medical Insurance
A low deductible medical insurance policy is considered ideal for individuals with higher medical needs or who want enhanced coverage and a high sum assured.
Choosing the Right Medical Insurance
Remember that when it comes to medical insurance, one size doesn’t fit all. Therefore, it is essential to select the appropriate medical insurance plan that suits your needs and circumstances. Here are a few checkpoints that you should be mindful of to choose the best health insurance in India:
1. Age and Health Condition
Evaluate your age and health condition before buying medical insurance. This is because, typically, at a younger age and with low-risk health conditions, you can get enhanced coverage at an affordable premium.
2. Medical History
Before choosing between high and low deductible medical insurance, evaluate your family‘s medical history to determine if you are a high-risk or low-risk individual.
3. Lifestyle and Risk Factors
Everyday lifestyle choices also play a significant role in determining the type of medical insurance you need.
In the case of Saloni Shahi, she was a young woman with healthy lifestyle choices that reduced her chances of falling sick. In such a situation, opting for a deductible medical insurance policy typically works.
Pro Tip: You can opt to add riders to your existing policy, such as critical illnesses or accidental coverage, enhancing your coverage without incurring unreasonably high premiums.
To learn more about enhancing medical coverage for critical illnesses, click here.
Conclusion
Whether to choose medical insurance with a high deductible or a low deductible is primarily a decision that depends on your health, age, medical history, financial stability, and other relevant factors. One thing you must not forget is that a medical insurance plan is a step you are taking to build protection against the rising medical expenses in the country, and therefore, you must choose a plan that offers wholesome coverage for your needs.
If you haven’t already purchased medical insurance, consider this a reminder to get a reliable policy and build your protection.
