What Is Deductible in Health Insurance & Why It Matters

Published on May 21, 2025 | 3 min read

In health insurance, a deductible is the amount you pay out-of-pocket for the medical expenses incurred before the insurance coverage starts. In simple words, it’s your share of the total cost. A deductible splits the risk and expenses between the insured and the insurer and prevents policyholders from raising minor claims.

A deduction will reduce your health insurance premium, but it lowers coverage. Let’s understand in detail what a deductible is in Health insurance, its types and whether you opt for it.

Key Takeaways

Deductible is a specific amount you pay for the medical expenses incurred before your health insurance coverage starts.
Types of Deductible include compulsory, voluntary, cumulative, comprehensive and non-comprehensive.
Deductibles prevent policyholders from raising minor claims with the insurers and divide the risk between the insured and the insurer.

What Is Deductible in Health Insurance?

In health insurance, a deductible is a clause that makes the insured responsible for a fixed amount of the total expenses incurred and the balance is paid by the insurer. For example, you have a health insurance policy with a deductible of ₹10,000. Any medical expenses that are below this amount, you have to bear. If the expenses are above the set deductible, like ₹15,000, you will have to pay ₹10,000 and the insurer will cover the balance amount i.e .

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Types of Deductibles

Since a deductible mandates the insured to pay a share of the total medical costs, it encourages policyholders to maintain their physical health since they would have to pitch in for the cost of medical treatments.

Compulsory Deductible

Compulsory deductible is the fixed amount you have to pay for every claim raised. For example, if your health insurance has a compulsory deductible of ₹10,000 and the medical bill amount is ₹30,000. You have to pay the compulsory deductible of ₹10,000 and the rest ₹20,000 will be borne by the insurer. Compulsory deductions are fixed, hence have no impact on the policy premium.

Voluntary Deductible

Some insurance policies offer voluntary deductibles you can opt for to reduce your premium payments. You can set the deductible amount based on your affordability and medical expenses. For example, you opt for a voluntary deductible of ₹50,000 and your medical bill is ₹1 lakh, you pay only ₹50,000 while the insurance provider will pay for the remaining amount. This type of deductible is suitable for people who don’t require extensive and frequent medical treatments and want to lower their premiums.

Cumulative Deductible

Cumulative deductibles are generally offered under family floater top-up plans, which cover multiple members under one policy. In this feature, the deductible amount is payable only once in a policy year, applied to the total aggregate claims made by any member, rather than on a per-claim basis.

Comprehensive Deductible

A comprehensive deductible is a fixed and upfront amount you must pay for all covered medical expenses. It is applicable to a wide range of medical services rather than specific treatments. A comprehensive deductible is a single, cumulative amount you must pay during the policy year. Opting for a comprehensive deductible generally lowers your insurance premium and is common in family floater health insurance policies.

Non-comprehensive Deductible

A non-comprehensive deductible is a predetermined amount you pay for specific medical services before the insurance coverage kicks in. This type of deductible reduces premium costs by shift of frequency and lower-cost medical treatments to the insured.

How Does the Deductible Impact Your Premiums?

Health insurance deductibles have an inverse relationship with premium, the higher the deductible, the lower would be the premiums. Deductibles encourage policyholders to use their health insurance responsibly by avoiding raising unnecessary claims and enable them to maintain lower premiums.

Do note: All types of deductibles lower your premium costs except for Compulsory deductibles.

Should You Opt for a Deductible?

Opting for a deductible can be an excellent option for health individuals with low risks who don’t require extensive medical treatments, resulting in lower claims. A deductible could help such individuals secure lower premiums over the potential higher and unpredictable costs.

However, if you suffer from chronic illnesses and require regular medication, opt for a lower deductible so the major portion of the bills are borne by the insurer.

A deductible is the predetermined, fixed amount you must pay out-of-pocket for medical expenses before your insurance coverage begins. While a higher deductible lowers your premium, it also reduces your immediate financial protection. Therefore, a higher deductible is generally recommended for healthy individuals who have infrequent claims and sufficient savings to bear higher initial medical costs.

FAQs

What is a deductible in health insurance?

A deductible is the fixed amount you pay out-of-pocket for medical expenses before your insurance company starts covering the remaining cost.

Is a higher deductible better?

It can lower your premium, but you'll have to pay more during a claim. It is best suited for healthy individuals with a financial backup.

Does the deductible apply to every claim?

It depends on the type: the per-claim deductible applies to each individual claim, while the annual deductible applies once per year.

Can I change my deductible amount later?

Typically, you can only change it at the time of policy renewal, not mid-term.

Is deductible the same as co-pay?

No. A deductible is a fixed amount, while a co-pay is a percentage of the claim that you pay each time.

About Author

Mariyam Sara

Sub-Editor

holds an MBA in Finance and is a true Finance Fanatic. She writes extensively on all things finance whether it’s stock trading, personal finance, or insurance, chances are she’s covered it. When she’s not writing, she’s busy pursuing NISM certifications, experimenting with new baking recipes.