How to Explain an Insurance Deductible

If you're looking at insurance policies, whether an auto, health or home insurance policy, you'll notice that each policy includes a "deductible" amount. Explaining a deductible to a person or group of people is best done by giving them the definition of the term, and then giving them an example so they can picture the definition visually. You also have to explain that there is an exception to deductibles when it comes to health insurance.

Instructions

• 1

  Explain that an insurance deductible is what the insured person must pay before the insurance company pays anything. Also explain that insurance policies with low monthly premiums often have the highest deductibles, while expensive policies generally have low deductibles.

• 2

  Give an example to the person or group that you're explaining a deductible to, such as: If you have an auto deductible of $500, then you must pay $500 out-of-pocket before your auto insurance will pay for anything.

• 3

  Explain that there are exceptions when dealing with copays regarding health insurance deductibles. A copay is a flat fee assessed for certain medical expenses, such as doctor visits, emergency room visits and prescriptions--generally things that are not major and do not require procedures, therapy or tests. A copay does not affect your deductible. For example, if you visit a doctor and your insurance policy includes a $25 copay for doctor visits, that is not money paid towards your deductible. If you visit the doctor, pay a $25 copay and $200 for blood tests, then the $200 counts towards your deductible, but the copay itself does not.