Deductibles and Excess
Deductible, also known as an excess, refers to an amount of money the insured is responsible for paying when making a claim. This amount is deducted (hence the name) from the final reimbursement amount. A higher deductible leads to a lower annual premium. It is a great way to reduce the premium while managing the risk.
Generally, insurance companies offer plans with three types of deductibles:
- Annual
The amount per policy year not covered by the insurer. The insured is responsible for the agreed amount and is fully reimbursed for any expenses above this amount.
For example: If the insured's annual deductible is $1,000 and the visit to a doctor costs $200, then the insured will not be reimbursed. When the insured has visited the doctor 11 times then the total is $2,200. Therefore the insured will be reimbursed $1,200
- Per Condition
This is the most common type of deductible and is applied only once during the treatment of a certain condition. The deductible amount is agreed upon between the insurance company and the insured.
For example: The Insured has agreed upon $50 deductible per condition, so when a total bill for the treatment of the insured's flu comes to $100, the insurance company reimburses $50. If the three visits to the doctor for the treatment of the flu came to a total of $300, the insured is reimbursed $250.
There is also a third type of deductible that is generally used by insurance companies regarding dental or maternity cover:
- Co-insurance
The insured is reimbursed based on the percentage of the total cost. If the co-insurance is 20%, then the insurance company is responsible for 80% of the total cost; the rest is paid for by insured.
For example: The insured co-insurance is 20%, if the total bill comes to $100, the insurance company reimburses $80, and the policyholder pays the remaining $20.
For more information about deductibles and the way they can influence your plan, or to receive a free quote, please contact us.
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