Selasa, 03 Juli 2012

High-Deductible Insurance Plans On The Rise

When it comes to any type of insurance, almost everyone wants to get the coverage they need for the lowest premium possible. There are many techniques to lower insurance premiums that have been suggested in the past. One of the most common is to increase the deductibles. This is why many people who do not have a choice but to avail insurance like auto insurance are choosing to increase the deductibles just to lower the premium.
What Is a Deductible?
What is a deductible? Many people who are new to getting insurance do now know which is which. To start off, premiums are the ones you pay to keep the insurance in effect. The premiums can be paid monthly, quarterly, bi-annually and annually. Premiums are determined based on a variety of factors including your deductibles. The deductibles are the amount that you need to pay before the insurance company's turn comes in. The deductible is also known as out of the pocket expenses. For example, you need to pay the doctor using your own money as to reach the amount set for the deductible. Once it is reached, it is the insurance company's turn and all you need to do for the following visits is to present your card.
You Have Absolute Control on the Deductible
Most companies give the policy holders freedom when it comes to the deductibles. You set the amount and they will compute the premium based on it and other factors. This is why many people opt to use this opportunity thinking that they can save on premiums if the deductibles are high.
Are There Savings When You Increase Deductibles?
If you do it right and if the events are on your side, savings on premiums for policies with high deductibles are big. For example, you choose to increase the deductible and you didn't get any illness that requires hospitalization in that year. There is certainly a big saving on your part. However, you may not be saving at all if you increase the deductibles and met an accident or had a severe disease within the year. You will most likely be spending all your money before the deductible is reached.
The same is true for car and home insurance. You can increase the deductible to lower the premiums. However, you will be spending a lot of money for out of pocket costs in case of car accident or fire. Simply put, increasing the deductibles to lower the premiums will save you some money if (and only if) you will not face unfortunate events like accidents.
High-Deductible Insurance May Not Be for You
There is no definite guideline when you can use high deductibles to lower your premiums. However, you can base on some factors such as your income and health. For example, assess your income and see if you can afford high out of pocket expenses that could reach thousands of dollars. You should also evaluate your health. High deductible plans are for you if you are in good health and don't need to visit a doctor very often or need to take prescription drugs regularly. However, forget about the high deductible route just to lower the premium if you plan on having a baby or already have a condition that needs regular consultation and medical exams.