What is a Deductible?

Answer:
A deductible can apply to many different types

of insurance including auto insurance, health insurance, dental insurance, and home owners insurance. The deductible is the amount that you have to pay while your insurance may cover the rest, or a percentage of the rest.

This means if you have a 500 dollar deductible for your health insurance and the insurance pays 100 percent after that, you may have to pay up to the 500 dollars for a hospital stay or testing (depending on the cost of your tests) and the nature of your policy. If an office visit is involved you may have a co-payment as well, which will be an office visit fee as well as the deductible.

The reason for deductibles is to make insurance policies more affordable and to reduce some of the risk insurance companies assume. The larger your deductible the lower your insurance premium. For example, an auto insurance policy with a deductible of $500 runs $500 every six months. The same driver with the same vehicle may choose a $1000 deductible which would lower their insurance premium to $400. The insurance company can lower your premium as you assume more of the risk.

Check your insurance carefully for details on what your deductibles are.


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