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Buying health insurance is an essential investment you can make.
Although there are some terms you may not be familiar with or understand in an instant, and they might often seem confusing while buying a health insurance policy. Particularly, when it comes to terms like deductible, co-pay, and coinsurance, someone without proper knowledge of these terminologies can become confused.
Let's take a look at the meaning of coinsurance, deductible, and co-pay and their implications on a health insurance policy.
A deductible is a fixed amount of money that policyholders pay to the insurance provider before their insurance policy starts covering their medical expenses. The terms and conditions for paying deductibles are usually decided in the policy documents by the insurer, whether the feature is for a policy year or per treatment.
For example, if your health insurance has a deductible amount of Rs. 10000, you will be required to pay for your treatment costs amounting up to Rs. 10000, only after which your insurance policy will become active. A deductible amount is usually levied to help insurers guard their interest against routine and unnecessary claims.
You can reduce your insurance premium payments towards insurance policies, although it may increase the total cost that an individual has to pay towards their medical treatment.
When a policyholder has to pay a fixed part of their medical expense and the rest of the treatment cost is borne by the insurer, it is called a co-pay. It is usually a fixed amount you have to pay for a medical care service, generally when you receive the service. The amount may vary based on the type of service.
For example, if your policy comes with a co-pay clause of 20% of your medical expenses, and the treatment costs you Rs. 15,000, now, you will be required to pay Rs. 3000 towards your treatment, while the rest of Rs. 12000 will be paid by the insurance provider.
With the co-pay clause, insurers bear most of the claim amount, while the policyholder covers a certain amount. A lower co-pay amount reflects on the premium amount, a low co-pay means a higher premium. Usually, the co-pay clause is levied on health insurance policies for senior citizens.
Coinsurance is a certain percentage of treatment expenses you bear after paying the deductibles. This amount is usually stated as a fixed percentage. It is quite similar to the co-payment clause in health insurance.
The amount is calculated mostly after you have paid your deductibles. Coinsurance helps insurance companies against large claims. You have to pay your deductible amount before the coinsurance plan comes into action. The percentage of coinsurance amount is usually fixed and mentioned in the policy documents.
The following cost-sharing features in health insurance may sound enticing since opting for them may reduce your insurance premium, but your liability towards the policy is likely to increase. You will have to pay for a portion of the treatment cost every time a medical emergency occurs. It may not be a pleasant experience if you do not have readily available cash in hand. You may opt for the above services after making an informed decision and a proper understanding of the terms and their implication on your policy.
Kotak General Insurance offers a diverse range of health insurance services and products to help you secure your future from any uncertain medical emergency.
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