A deductible is something that is often accompanying an insurance policy. This deductible is the amount one pays initially before the insurance starts to kick in. for example, if the deductible on a house is $500 and a tree falls on the house, this is the amount that the homeowner is expected to pay before the insurance company starts to work on the house. Some types of policies such as home and auto insurance give the insurance taker the option of setting the deductible themselves. As for health insurance, there is a fix deductible such that when picking a health insurance he has to look out for a policy which has a deductible that he can afford to pay. Therefore, it is important for those taking out insurance policies to consider the deductible when taking out a policy and find out how much of it is right for them. The author suggests some tips on how to do that. The first thing that has to be done is that the one taking out the insurance policy has to understand the difference between deductibles and premiums. Because most people would want a lower deductible because it means they have to pay lesser out of pocket money, this comes at a higher cost. That cost is that premiums will be higher. This is what insurance policy takers have to understand first. Other tips are set out in the blog.
- Higher deductibles usually mean lower premiums but you will pay more out of pocket before your insurance kicks in if you do file a claim.
- If you have or expect to have upcoming major medical expenses you may want a policy with a smaller deductible.
- It is important to ensure you have the ability to pay your deductible if need be by having a health savings account or some other type of emergency fund.
“Since you’re responsible for the deductible when you need covered services, it’s important you always consider how much of a deductible is right for you.”