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Low Insurance Premium or High Cover: Know How to Strike Balance?

Striking the perfect balance between health insurance policy coverage and Policy deductibles can be confusing to some people.

In other words, deductibles are the percentage of the total insured amount that you must pay for treatment before the insurer will pay it to you on an insurance claim. By increasing your deductible, you can lower your premium while increasing your out-of-pocket expenses for medical care.

What are Deductibles in Health Insurance?

The deductible in a health insurance plan is the amount that a policyholder must pay before receiving compensation from the insurance company.

In other words, the insurance company is only liable for claims that exceed the deductible. If the deductible on your policy is Rs 30,000 and the insured makes a claim for Rs 40,000, the insurance provider is only responsible for Rs 10,000.

However, if the claim does not exceed the deductible, the insurer is not compelled to pay anything. Premiums for insurance with a high deductible are lower, whereas premiums for policies with a low deductible are higher.

How Does a High Deductible Policy Work?

When obtaining a high-deductible health insurance plan, you select the deductible amount and the sum insured. Following that, if you file a claim for an amount larger than your chosen deductible, the selected insurance company will pay the excess.

Assume you get a medical insurance policy with a sum insured of Rs. 5 lakhs and a deductible of Rs. 1.5 lakhs. Assume you wish to submit a claim for Rs. 3 lakhs. In this case, you would be responsible for the claim up to the deductible (Rs. 1.5 lakhs), with the insurance provider covering the excess (Rs. 1.5 lakhs) in accordance with the terms of the policy.

What is Low Deductible Health Insurance?

In a medical insurance plan with a low deductible, you will be compensated for the difference between the deductible and the excess amount if your claim exceeds the deductible amount. The idea of these plans is the same as that of high-deductible plans; the only difference is that the deductible is smaller. The low deductible comes with a  higher premium, however, it saves you from huge cash payments out of your pocket at the time of treatment.

How Does Low Deductible Health Insurance Work?

The low deductible provides the same health insurance benefits as the high deductible. Assume you purchase a health insurance policy with Rs. 25,000 deductible and a Rs. 5 lakhs coverage value. Assume you wish to submit a claim for Rs. 3 lakhs. In this instance, you will be responsible for the claim up to the deductible (Rs. 25,000), and the insurance provider will compensate you for the excess (Rs. 2.75 lakhs) in accordance with the provisions of the plan.

Should I choose a High or Low-Deductible Health Insurance Plan?

The decision to pick a low or high deductible shall depend on two major factors:

  1. Your coverage needs
  2. Your affordability

A low- or no-deductible health plan is the best option in the following situations.

  • If you have a critical illness policy or senior citizen health insurance policy
  • If you visit the doctor often due to your health requirements
  • You have a child, are expecting a child, or are thinking about starting a family.
  • If you are expecting major surgery in the future

A high-deductible is more suitable for your medical insurance plan if:

  • You are young and health
  • You have a stable and substantial income
  • You have a good medical history and health
  • If you are unmarried and don’t have the responsibility of children
  • If you are not expecting surgery anytime soon

What should You Choose?

The choice between a high-deductible and a low-deductible plan is entirely dependent on your and your family’s health, medical needs, and financial circumstances. In order to make an informed decision, you must first consider your coverage needs, premium affordability, and your current health insurance coverage.


With various types of health insurance in the market, it is recommended you research each detail well in advance. If you anticipate you will be unable to pay your policy premiums and just require coverage for minor medical emergencies, you might opt for a high-deductible plan. That alternative may be an option for folks who believe they can fund at least some of the treatment costs. If you don’t want to be without coverage in the event of an emergency, choose deductibles that are as low as feasible.

If you are looking for a common health insurance policy for your family, you can check group health insurance plans or family health insurance plans.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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