Understanding health insurance and its associated terms can be troublesome. However, ignoring these can land one in a spot. Voluntary deductible is one such component of your health insurance policy that is likely to have a considerable impact on claim settlement.
What is a voluntary deductible?
Voluntary deductible, also referred to as excess, represents that part of your claim that you would have to foot yourself before insurance coverage can kick in. Simply put, a voluntary deductible will have to be borne by you (the insured) while the remainder of the claim amount would be taken care of by the insurance provider.
Your sum assured is Rs.5 lakh, whereas the voluntary deductible is pegged at Rs.1 lakh.
Scenario#1: You file a claim of Rs.85,000. In this case, you will have to bear the entire amount yourself, considering the claim value doesn’t exceed the deductible limit.
Scenario#2: You file a claim worth Rs.2 lakh. In this case, you will have to foot Rs.1 lakh (considering it is the voluntary deductible) whereas the insurer will bear the remainder Rs.1 lakh.
Why voluntary deductible?
Insurance companies set voluntary deductibles as probable safeguards against trivial and frequent claims. The rationale behind it is that should you know that you would have to bear a certain portion of a particular claim amount, chances are you would avoid making minor unnecessary claims. This would go on to bring down the number of claims filed, thereby resulting in reduced frauds and administrative expenses as well.
Advantages of voluntary deductibles
✓ Carefully chosen voluntary deductibles can help in reducing policy premium
✓ Deductibles might make you wary of filing trivial, insignificant claims. This directly influences your eligibility to earn a cumulative bonuses (if you haven’t filed any claim over successive policy periods).
The only downside to a large voluntary deductible is that it might erode your savings and force you to pay for medical expenses, even if you don’t have adequate financial resources at your disposal.
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