Whether you’re paying for life, home, car insurance, or all three, being covered for damages and losses comes at the expense of paying for premiums and deductibles. Premiums are the fee you need to pay to keep the insurance, meaning you’re paying a certain amount of money so bills for accidents, injuries, and other great events are covered by the insurance provider.
About The Deductible
However, the deductible is another type of expense in individual healthcare plans, though this money goes to the provider. Deductibles exist so they can protect policyholders from losing money and to help keep a level playing field between insurance providers and insurance owners in the event of a major accident, injury, or other episode.
The deductible refers to how much money you would need to pay as the damage or loss occurs. For instance, if a garbage can or bin that belongs to you ends up on the road and causes a car accident, you’ll need to pay a deductible.
You pay deductibles when problems occur, compared to premiums that are paid every month. So for example, if you pay 50 dollars monthly in premiums, you may have deductibles which cost around 500 dollars as they’re required. Thus, you pay 500 dollars for losses or damages while your provider pays the majority of what you owe. In the case of car insurance, deductibles can be a way to encourage safe driving in addition to being how the cost of damages can be evenly distributed between drivers and their insurance companies.
Can Deductibles Change?
You can get an insurance plan with a high deductible or a low deductible, but just remember that your premium is determined by the deductible’s value. The relationship between premiums and deductibles has a seesaw effect. So if you get a plan that requires a low monthly payment, the deductible will go up, so you will pay more money in an event where the provider needs to get involved. Choosing a high monthly payment will mean your premiums will go down.
Everybody’s insurance needs are different, however. When you sign up for an insurance plan, there are many factors to consider to help you decide which plan to buy so it best suits your needs. Insurance plans are created out of risk, so you and your provider will make an agreement that both parties will both be held accountable for a portion of risk.
Which Deductible Level Should I Choose?
Insurance companies often have multiple plans for you to choose that involve deductible increments like 250, 500, and 1,000 dollars. Driving history and income are two of the biggest factors to help one decide on deductibles. If you make a lot of money, you likely wouldn’t mind paying a higher premium amount if it means paying less for incidents. If you’re a good driver, and never got in an accident before, you’ll feel confident in choosing a high deductible. Those that have a reckless or unfortunate auto history will want to pick the low deductible. If you’ve been driving for over ten years and haven’t had a single auto incident, you could possibly lower your deductible without increasing your premium.
Deductibles are expenses that you pay if you need your insurance company to help cover a cost. Deductibles are high or low depending on how much money you pay each month in premiums. Owners can choose how much they pay in deductibles in the form of a different insurance plan, but the premiums will also change, making some plans more suitable for owners than others.